LIBRARY 

DIVERSITY  OF  CALIFORNIA 
RIVERSIDE 


PREPARED  UNDER  THE  DIRECTION  OF 

FREDERICK  A.  CLEVELAND,  PH.  D. 


TEACHERS'  PENSION  SYSTEMS  IN  THE 

UNITED  STATES:  A  CRITICAL  AND 

DESCRIPTIVE  STUDY 


Publications  of 
The  Institute  for  Government  Research 


STUDIES  IN  ADMINISTRATION 

The     System  of     Financial     Administration     of     Great 
Britain 

By    W.  F.    Willoughby,    W.    W.    Willoughby   and 

S.  M.  Lindsay 

The  Budget 

By  Rene  Stourm 

(T.    Plazinski,    Translator;    W.    F.    McCaleb,    Editor) 

The  Canadian  Budgetary  System 
By  H.  G.  Villard  and  W.  W.  Willoughby 

The  Problem  of  a  National  Budget 
By  W.  F.  Willoughby 

The  Movement  for  Budgetary  Reform  in  the  States 
By  W.  F.  Willoughby 

Teachers'  Pension  Systems  in  the  United  States 
By  Paul  Studensky 

Organized  Efforts  for  the  Improvement  of  Methods  of 
Administration  in  the  United  States 
By  G.  A.  Weber 


PRINCIPLES  OF  ADMINISTRATION 

Principles   Governing   the    Retirement   of   Public    Em- 
ployees 
By  Lewis  Meriam 

Principles  of  Government  Purchasing 
By  A.  G.  Thomas 


SERVICE   MONOGRAPHS   OF  THE  UNITED 
STATES  GOVERNMENT 

The  U.  S.  Geological  Survey 
The  Reclamation  Service 

D.  APPLETON  &  COMPANY 

PUBLISHERS  NEW   YORK 


THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 

STUDIES  IN  ADMINISTRATION 


TEACHERS' 

PENSION  SYSTEMS  IN  THE 
UNITED  STATES 

A  Critical  and  Descriptive  Study 


BY 

PAUL  STUDENSKY 


Submitted  in  Partial  Fulfillment  of  the  Requirements 
for  the  Degree  of  Doctor  of  Philosophy 
in  the  Faculty  of  Political  Science 
Columbia  University 


D.  APPLETON  AND  COMPANY 

NEW  YORK  LONDON 

1920 


Publications  of 
The  Institute  for  Government  Research 


STUDIES  IN  ADMINISTRATION 

The     System  of     Financial     Administration     of     Great 
Britain 

By    W.  F.    Willoughby,    W.    W.    Willoughby   and 

S.  M.  Lindsay 

The  Budget 

By  Rene  Stourm 

(T.    Plazinski,    Translator;    W.    F.    McCaleb,    Editor) 

The  Canadian  Budgetary  System 
By  H.  G.  Villard  and  W.  W.  Willoughby 

The  Problem  of  a  National  Budget 
By  W.  F.  Willoughby 

The  Movement  for  Budgetary  Reform  in  the  States 
By  W.  F.  Willoughby 

in  the  United  States 


SERVICE   MONOGRAPHS   OF  THE  UNITED 
STATES  GOVERNMENT 

The  U.  S.  Geological  Survey 
The  Reclamation  Service 

D.  APPLETON  &  COMPANY 

PUBLISHERS  NEW   YORK 


THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 

STUDIES  IN  ADMINISTRATION 


TEACHERS' 

PENSION  SYSTEMS  IN  THE 
UNITED  STATES 

A  Critical  and  Descriptive  Study 


BY 

PAUL  STUDENSKY 
*•» 


D.  APPLETON  AND  COMPANY 

NEW  YORK  LONDON 

1920 


COPYRIGHT,  IQ20,  BY 

THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 


Printed  in  the  United  States  of  America 


The  Institute  for  Government  Research 

WASHINGTON,  D.  C. 


The  Institute  for  Government  Research  is  an  association  of 
citizens  for  cooperating  with  the  public  officials  in  the  scientific 
study  of  administrative  methods'  with  a  view  to  promoting  effi- 
ciency in  government  and  advancing  the  science  of  administra- 
tion. It  aims  to  bring  into  existence  such  information  and 
materials  as  will  aid  in  the  formation  of  public  opinion,  and 
will  assist  officials,  particularly  those  of  the  national  govern- 
ment, in  their  efforts  to  put  the  public  administration  upon  a 
more  efficient  basis-. 

To  this  end,  it  seeks  by  the  thoroughgoing  study  and 
examination  of  the  best  administrative  practice,  public  and 
private,  American  and  foreign,  to  formulate  those  principles 
which  lie  at  the  basis  of  all  sound  administration,  and  to 
determine  their  proper  adaptation  to  the  specific  needs  of  our 
public  administration. 

The  accomplishment  of  specific  reforms  the  Institute  recog- 
nizes to  be  the  task  of  those  who  are  charged  with  the 
responsibility  of  legislation  and  administration;  but  it  seeks 
to  assist,  by  scientific  study  and  research,  in  laying  a  solid 
foundation  of  information  and  experience  upon  which  such 
reforms  may  be  successfully  built. 

While  some  of  the  Institute's  studies  find  application  only 
in  the  form  of  practical  cooperation  with  the  administrative 
officers  directly  concerned,  many  are  of  interest  to  other 
administrators  and  of  general  educational  value.  The  results 
of  such  studies,  the  Institute  purposes  to  publish  in  such 
form  as  will  insure  for  them  the  widest  possible  utilization. 


ROBERT  S.   BROOKINGS 

Chairman 

FRANK   J.    GOODNOW 
Vice-Chairman 


EDWIN  A.  ALDERMAN 
ROBERT  S.  BROOKINGS 
JAMES  F.  CURTIS, 
R.  FULTON  CUTTING 
RAYMOND  B.  FOSDICK 
FELIX  FRANKFURTER 
FRANK  J.  GOODNOW 
JEROME  D.  GREENE 
ARTHUR  T.  HADLEY 


OFFICERS 


JAMES  F.  CURTIS 

Secretary 

FREDERICK  STRAUSS 
Treasurer 


TRUSTEES 


CESAR  LOMBARDI 
A.  LAWRENCE  LOWELL 
SAMUEL  MATHER 
CHARLES  D.  NORTON 
MARTIN  A.  RYERSON 
FREDERICK  STRAUSS 
THEODORE  N.  VAIL 
ROBERT  S.  WOODWARD 


DIRECTOR 

W.    F.    WlLLOUGHBY 

EDITOR 
LEWIS  MAYERS 


ACKNOWLEDGMENT 

The  author  is  indebted  to  Dr.  F.  A.  Cleveland  and  Dr.  W.  F. 
Willoughby  for  their  invaluable  direction  in  the  preparation  of 
this  book,  to  Professor  Howard  L.  McBain,  Dr.  I.  M.  Rubinow 
and  Mr.  Lewis  Meriam  for  reading  the  manuscript  and  making 
helpful  suggestions,  and  to  the  editors  of  the  Bureau  of 
Municipal  Research  and  of  the  Institute  for  Government 
Research,  Dr.  W.  F.  McCaleb  and  Dr.  Lewis  Mayers. 

PAUL  STUDENSKY. 


CONTENTS 

PART  I.      THE  PROBLEM  OF  TEACHERS'   PENSIONS 

CHAPTER  PAGE 

I.    THE  EVOLUTION  OF  TEACHERS'   PENSIONS  IN  THE  UNITED 

STATES  4 

Mutual  Aid  Associations 4 

The  Beginnings  of  Unsound  Legislation,  1894-1896 15 

Development   of    Governmental   Contributions 23 

Unsoundness  of  Funds   Demonstrated 26 

Present  Extent  of  Teachers'  Pension  Systems 29 

Growth  of  State- Wide  Systems 30 

Conclusion:  Present  Tendencies  and  Forces 34 

II.     THE  TEACHERS'  PENSION  PROBLEM  OUTLINED 

Groups  of  Persons  to  be  Included 37 

Extension  of  Systems  to  Contingencies  other  than  Super- 
annuation      4° 

Conditions  under  which  Benefits   Should  be  Granted...  41 

Amount  of  Benefits 47 

Division  of  Cost  between  Employer  and  Employees 48 

Contributions   of   Individual   Members S3 

Compulsory  Participation 54 

Right  to  Management 55 

Securing  Enactment  of  the  System 56 

III.  SUPERANNUATION  BENEFITS 

Eligibility  for  Superannuation  Benefits 57 

Compulsory    Retirement 63 

Amount  of  Superannuation  Benefit 63 

Provisions  for  Minimum  and  Maximum  Pensions 72 

IV.  DISABILITY  BENEFITS 

Conditions  under  which  Disability  Benefits  are  Provided.  79 

Amount   of    Disability   Benefits 80 

Medical  Examinations  and  Reexaminations 82 

V.    DEATH  AND  WITHDRAWAL  BENEFITS 

Death    Benefits 86 

Benefits  at  Resignation  or  Dismissal 90 

Withdrawal  and  Loan  Privileges 92 

VI.    DETERMINING  THE  COST  OF  BENEFITS 

Growth    of    Pension    Payments 95 

Cost  as  Related  to  Method  of  Financing  System 100 

Actuarial  Determination  of  Cost 101 

The  Problem  of  Accrued  Liabilities 104 

Inadequacy  of   Contributions  in  Existing  Systems 107 

Estimating  the  Liabilities  of  a  Going  System 113 

Cost  and  Liabilities  Involved  under  Different  Benefits...  115 

xi 


CONTENTS 

CHAPTER  PAGE 

VII.    THE  DIVISION  OF  COST  BETWEEN  GOVERNMENT  AND  TEACHERS 

The  Wholly    Contributory    System 118 

The  Non-Contributory  System 119 

The  Joint  or  Partly  Contributory  System 120 

The  Division  of  Cost  between  Teachers  and  Govern- 
ment in  Existing  Systems 122 

VIII.    THE  GOVERNMENT'S  CONTRIBUTION 

Various  Elements  Determining  Amount  of  the  Govern- 
ment's Contribution 125 

Coordinating  the  Various  Elements  of  the  Contribution.     135 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: The  Cash  Disbursement  Method 135 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution :  Using  Special  Revenues  not  Determined  by 
Pension  Needs 137 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: Fixing  Rates  not  Related  to  Pension  Needs.  140 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution:  Amount  of  Contribution  Discretionary 142 

IX.    THE  TEACHER'S  CONTRIBUTION 

Contribution  not  on  a  Cost  Basis :  Uniform  for  all  Mem- 
bers, Irrespective  of  Age,  Salary,  Sex  and  Service 145 

Contribution  not  on  a  Cost  Basis :  Graduated  According 
to  Salary  145 

Contribution  not  on  a  Cost  Basis :  Graduated  According  to 
Length  of  Service 146 

Contribution  not  on  a  Cost  Basis :  Graduated  According 
to  Salary  and  Length  of  Service 146 

Contribution  of  a  Uniform  Percentage  of  Salary  for  all 
Members,  with  Benefits  Adjusted  on  a  Cost  Basis 148 

Rate  of  Contribution  Graduated  According  to  Age  and 
Salary :  Benefits  on  a  Cost  Basis 150 

Distributing  the  Contribution  over  the  Period  of  Service.     151 

Minimum  Contribution  as  a  Prerequisite  to  Full  Benefit.     152 

X.    COMPULSORY  PARTICIPATION  AND  THE  RIGHT  TO  MANAGEMENT 
Compulsion   for  New  Appointees :   Option   for  Teachers 

Already  in  the  Service 155 

Compulsion   for   Present  Teachers 156 

The  Selection  of  the  Managers  of  the  System 157 


PART  II.    TYPICAL  TEACHERS'  PENSION  SYSTEMS 
OF  TO-DAY 

XL    SYSTEMS  WITHOUT  RESERVES 

Pittsburgh   Teachers'    Retirement   Association 166 

New  Jersey  35-Year  Service  Pension  System 169 

Maine   School  Pension  Fund 173 

XII.     SYSTEMS  WITH  INADEQUATE  RESERVES  :  STATE  SYSTEMS 

Illinois  Teachers'   Pension  and  Retirement  Fund 176 

New  York  State  Teachers'  Retirement  Fund 179 

xii 


CONTENTS 


CHAPTER  PAGE 

New  Jersey  Teachers'  Retirement  Fund 183 

Minnesota  Teachers'  Insurance  and  Retirement  Fund...  190 

Wisconsin  Teachers'  Insurance  and  Retirement  Fund...  193 

California  Teachers'  Retirement  Salary  Fund 195 

Virginia  Retired  Teachers'  Fund 198 

Michigan  Teachers'  Retirement  Fund 200 

XIII.  SYSTEMS  WITH  INADEQUATE  RESERVES  :  LOCAL  SYSTEMS 

Philadelphia  Teachers'  Retirement  Fund 203 

Cleveland  Teachers'  Pension  Fund 207 

Boston  Teachers'  Retirement  Fund 209 

Boston  Teachers'  Permanent  Fund 212 

Baltimore  Teachers'  Retirement  Fund 214 

Buffalo  Teachers'  Retirement  Fund 216 

New  Orleans  Teachers'  Retirement  Fund 218 

Denver  Teachers'  Retirement  Fund 219 

XIV.  SYSTEMS  WITH  INADEQUATE  RESERVES  :  THE  CHICAGO  FUND 

The  Fund  Wholly  Contributory :  1895-1907 220 

City   Contribution   and    Compulsion    for    New   Entrants 

Since  1907   225 

First  Step  towards  Actuarial  Reorganization  in  1917 231 

XV.    THE  MASSACHUSETTS  FUND,  THE  FIRST  SCIENTIFIC  SYSTEM  ; 
THE  CONNECTICUT  FUND 

History  of  the  System 234 

Provisions  of  the  System 236 

Connecticut  Teachers'  Retirement  Fund 239 

XVI.    THE  NEW  YORK  CITY  FUND 

History  of  the  Old  Fund 243 

The  Bill  of  1916 246 

The  Enactment  of  the  Reorganization  Law  of  1917 255 

Provisions  of  the  New  System 259 

XVII.    THE  PENNSYLVANIA  SYSTEM 

Benefits  269 

Teachers'  Contributions    271 

State  Contribution    271 

Reimbursement 272 

Valuation    272 

Management    273 

Relation  to  Local  Funds 273 

XVIII.    THE  SCIENTIFIC  PENSION  LAWS  OF  1919:  NEW  JERSEY,  OHIO 
AND  VERMONT 

New  Jersey   274 

Ohio   282 

Vermont   287 

APPENDIX 

1.  COMPARATIVE  ANALYSIS  OF  TEACHERS'  PENSION  SYSTEMS 295 

2.  REFERENCES  TO  LAWS,   STATISTICAL  REPORTS,  ETC.,  RELATIVE  TO 

ALL  THE  TEACHERS'  PENSION  SYSTEMS  IN  THE  UNITED  STATES  307 

3.  LAWS  PROVIDING  FOR  SOUND  TEACHERS'  PENSION  SYSTEMS 346 

(a)  Massachusetts    346 

(b)  City  of  New  York   355 

xiii 


EDITORIAL  INTRODUCTION 

ance  systems  in  those  states  and  localities  which  as  yet  have 
none.  At  present  seventeen  states  have  neither  state  nor  local 
pension  systems  for  their  public  school  teachers,  and  in  twelve 
of  the  remaining  states  there  are  only  a  few  local  systems. 
Approximately  one-half  of  all  the  public  school  teachers  in  this 
country  are  not  covered  by  any  pension  provisions.1 

It  need  not  be  pointed  out  that  the  making  of  adequate  finan- 
cial provision  for  the  retirement  from  service  of  teachers 
whose  abilities  have  become  impaired  by  age  or  otherwise  is 
not  simply  a  matter  of  equity  and  humanity  and  of  signifi- 
cance from  the  standpoint  of  general  social  betterment.  In 
several  respects  it  is  a  question  of  direct  administrative  effi- 
ciency. For  not  only  do  proper  retirement  provisions  make 
it  possible  to  relieve  the  working  force  of  relatively  incom- 
petent members,  but  the  teaching  career  is  made  more  attrac- 
tive and  thus  draws  to  its  service  a  better  personnel  and  stimu- 
lates its  members  with  a  higher  esprit  de  corps. 

A  soundly  constructed  teachers'  pension  system  is  one  that 
must  meet  a  variety  of  requirements.  Its  financial  arrange- 
ments must  be  such  that  permanent  solvency  is  assured;  the 
incidence  of  its  burdens  and  benefits  must  be  justly  appor- 
tioned not  only  as  between  the  different  groups  of  teachers, 
but  as  between  them  and  the  public,  as  represented  by  the 
government;  it  must  be  so  organized  and  administered  that 
the  greatest  possible  efficiency  of  service  on  the  part  of  the 
teaching  force  will  be  secured;  and,  finally,  it  must  make 
reasonably  adequate  provision  for  disabilities  to  the  teachers 
concerned  whether  arising  from  old  age,  sickness  or  accident. 
So  far  as  possible,  too,  provision  should  be  made  for  satisfy- 
ing the  equities  involved  when  teachers  are  dismissed  or  them- 
selves desire  to  resign  their  posts. 

The  present  study,  while  not  a  pioneer  one  in  the  sense  of 
being  the  first  attempt  to  make  a  scientific  investigation  of 
teachers'  pensions  in  the  United  States,  is  the  first  compre- 
hensive, critical,  and  descriptive  treatment  of  the  subject. 

*An  investigation  made  in  1917  showed  that  there  were  then  ninety-four 
teachers'  retirement  systems  in  operation.  These  systems  covered  332,  554 
teachers. 

This-  did  not  include  various  mutual  benefit  associations,  such  as  exist 
in  St.  Louis  and  Washington,  D.  C,  with  voluntary  memberships  and 
wholly  financed  by  the  teachers  themselves.  This  list  of  ninety-four  was 
made  up  entirely  of  schemes  which  were  official  and  integral  parts  of  the 
public  school  systems  concerned. 

It  should  be  noted,  however,  that  this  figure  is  obtained  by  including 
the  entire  teaching  staffs  within  the  jurisdictions  concerned.  The  actual 

xvi 


EDITORIAL  INTRODUCTION 

In  1906,  the  state  of  Massachusetts  appointed  a  commis- 
sion, with  Mr.  Magnus  W.  Alexander  as  chairman,  to  study 
the  general  problem  of  "old  age  pensions,  annuities  and  insur- 
ance." Incidentally,  the  commission  touched  upon  the  prob- 
lem of  pensions  in  the  public  service  and  published  in  1910 
a  report  which  stimulated  a  good  deal  of  sound  thought  in  the 
country.  Beginning  in  1910,  Mr.  Herbert  D.  Brown  pre- 
pared a  series  of  reports,  all  of  which  have  been  published  by 
the  national  government,  dealing  with  the  civil  service  retire- 
ment system  of  Great  Britain,  New  Zealand  and  New  South 
Wales,  Australia,  and  the  problem  of  establishing  a  retire- 
ment system  by  the  national  government  for  its  employees. 
The  New  York  Bureau  of  Municipal  Research  became  inter- 
ested in  the  pension  problem  soon  after  its  establishment.  It 
made  a  thorough  actuarial  investigation  of  the  New  York 
City  Police  Pension  Fund — the  first  actuarial  investigation 
of  a  civil  service  pension  fund  in  this  country — and  prepared 
a  report,  which  resulted  in  the  establishment  in  New  York 
City  of  a  commission  to  investigate  all  the  nine  pension  funds, 
including  the  teachers'  fund,  in  operation  in  New  York  City 
and  led  to  similar  actuarial  investigations  of  funds  in  other 
cities.  The  sound  pension  thought  which  emanated  from 
these  three  active  centers,  Washington,  New  York  City  and 
Boston,  spread  over  the  entire  country  and  affected  the  teach- 
ers' pension  movement. 

The  first  to  consider  the  establishment  of  a  sound  pension 
system  for  teachers  was  the  state  of  Massachusetts.  The 
state  board  of  education  was  directed  in  1911  to  investigate 
the  establishment  of  a  state-wide  retirement  system  for  teach- 
ers and  to  submit  its  recommendations  before  January,  1913. 
The  investigation,  aided  by  Mr.  C.  A.  Prosser  and  Mr.  W.  I. 
Hamilton,  resulted  in  the  establishment  in  1913  of  the  first 
scientifically  constructed  teachers'  retirement  system  in  this 
country. 

New  York  City  came  next  with  several  attempts  to  reor- 

number  of  persons  covered  must  have  been  considerably  less  since  many 
exercised  the  right,  ordinarily  granted  at  the  outset,  to  decline  to  be  en- 
rolled. Participation  of  all  new  appointees  being  made  compulsory,  how- 
ever, the  proportion  of  non-participants  has  been  steadily  diminishing. 
It  should  further  be  noted  that  the  figures  stated  were  compiled  from  the 
report  of  the  United  States  Bureau  of  Education  for  1917  and  cover  only 
the  year  1915-16.  Moreover,  for  some  of  the  localities,  the  number  of 
teachers  was  not  given  in  the  federal  reports  and  had  to  be  obtained 
through  correspondence  with  the  local  pension  fund  officials. 

xvii 


EDITORIAL  INTRODUCTION 

ganize  its  insolvent  retirement  fund  for  teachers.  It  finally 
effected  a  sound  reorganization  in  1917.  In  the  meanwhile 
the  Carnegie  Foundation  for  the  Advancement  of  Teaching 
became  convinced  of  the  necessity  for  a  reorganization  of  its 
retirement  system  for  college  professors.  It  began  a  study  of 
the  problem  in  1912  and  since  that  time  has  reviewed  in  its 
annual  reports  the  pension  progress  in  the  country,  thus 
greatly  contributing  to  the  scientific  consideration  of  the 
problem. 

The  establishment  of  the  sound  systems  of  Massachusetts 
and  New  York  City  gave  considerable  impetus  to  the  move- 
ment of  reorganization.  Connecticut  followed  the  example 
of  Massachusetts  in  establishing  a  similar  system  for  its 
teachers.  The  state  of  Pennsylvana  profited  from  the  reor- 
ganization experience  of  Massachusetts  and  New  York  City, 
and  established  a  new  system  introducing  certain  novel  fea- 
tures and  improvements.  Illinois  and  New  Jersey  have 
appointed  state  commissions  which  are  now  considering  the 
question  of  the  reorganization  of  their  teachers'  retirement 
systems. 

The  reports  of  each  of  these  investigating  commissions, 
and  the  other  publications  mentioned,  presented  mainly  a  pic- 
ture of  one  or  another  local  situation  and  discussed  certain 
aspects  of  the  problem,  but  made  no  attempt  to  survey  the 
entire  field  of  teachers'  pension  systems  in  this  country,  nor 
to  examine  the  whole  movement  and  summarize  the  princi- 
ples evolved  and  results  accomplished.  As  the  movement  pro- 
gressed the  need  for  such  a  broad  investigation  has  been  felt, 
and  to  answer  this  need  the  preparation  of  the  present  volume 
was  undertaken. 

The  first  step  in  the  investigation  was  to  make  a  search 
through  the  session  laws  and  codes  of  various  states  for  all 
the  laws  which  had  been  enacted  with  reference  to  teachers' 
pensions.  Annual  school  reports  of  the  United  States  Bureau 
of  Education  and  of  the  different  states,  official  documents, 
educational  magazines  and  other  publications,  which  had 
appeared  on  the  subject  during  the  last  thirty  or  forty  years, 
were  scrutinized,  and  an  exhaustive  bibliography  was  pre- 
pared. 

At  the  same  time  letters  were  sent  to  the  officials  in  charge 
of  the  different  systems,  the  existence  of  which  was  ascer- 
tained, requesting  copies  of  financial  reports,  statistics  and 

xviii 


EDITORIAL  INTRODUCTION 

other  information  necessary  for  determining  their  financial 
operations  and  present  condition.  These  letters  elicited  favor- 
able replies  and  secured  considerable  and  very  valuable  ma- 
terial. 

In  the  chapters  constituting  Part  I  of  the  volume  now 
published  a  description  of  the  evolution  of  teachers'  pensions 
and  an  analysis  of  the  general  problem  of  providing  retirement 
allowances  to  teachers  is  given,  together  with  a  discussion  of 
the  principles  governing  the  establishment  and  maintenance 
of  sound  systems.  In  Part  II  an  account  is  given  of  the  move- 
ment in  the  United  States  and  a  descriptive  and  critical  exam- 
ination made  of  the  history  and  present  condition  of  the  more 
important  systems  now  in  existence.  Twenty-four  systems 
were  thus  selected  for  detailed  study,  the  main  features  de- 
termining their  selection  being  their  age,  sources  of  support 
and  scope  of  membership.  The  funds  of  fifteen  of  the  systems 
thus  selected  are  in  part  provided  by  contributions  from  the 
teachers  organized  under  them ;  four  derive  their  funds  wholly 
from  this  source;  while  five  of  them  make  no  demands  upon 
the  purses  of  the  prospective  beneficiaries.  In  the  aggregate, 
it  is  estimated  that  the  twenty-four  systems  described  affect 
over  three-quarters  of  all  the  teachers  embraced  in  the  ninety- 
four  pension  systems  now  in  operation  in  the  United  States. 

In  general,  it  may  thus  be  said  that  the  volume,  combining 
as  it  does  a  discussion  of  principles  with  the  description  of  the 
experiences  of  existing  systems,  should  be  not  only  a  substan- 
tial contribution  to  the  science  of  administration,  but  an  imme- 
diate and  practical  aid  to  teachers,  school  authorities,  legisla- 
tors and  all  other  persons  interested  in  solving  the  problem  of 
reorganizing  their  own  systems  or  establishing  systems,  in 
case  they  already  have  none,  upon  bases  that  have  been  tested 
by  experience  and  are  in  accordance  with  sound  social,  eco- 
nomic, and  financial  principles.  Furthermore,  most  of  the 
considerations  and  principles  which  apply  to  the  educational 
services  of  the  state  are  applicable  to  the  other  administrative 
branches  of  our  federal  and  state  governments.  Mr.  Studen- 
sky's  volume,  therefore,  finds  a  very  proper  place  in  the  series 
of  "Studies  in  Administration"  which  the  Institute  for  Gov- 
ernment Research  is  publishing. 

During  the  opening  months  of  1919  while  this  volume  was 
in  press,  three  states,  New  Jersey,  Ohio  and  Vermont  enacted 
laws  establishing  new  pension  systems  on  approved  principles 

xix 


EDITORIAL  INTRODUCTION 

These  laws  have  been  fully  discussed  in  a  concluding  chap- 
ter which  was  added  to  the  book  while  in  press,  and  the  laws 
themselves  are  reproduced  in  full  in  Appendix  3.  It  was 
not  found  practicable,  however,  to  amend  the  text  at  every 
minor  point  to  take  account  of  the  establishment  of  these 
new  systems. 

W.  F.  WlLLOUGHBY. 


XX 


PART  I 
THE  PROBLEM  OF  TEACHERS'  PENSIONS 


CHAPTER  I 


While  the  problem  of  teachers'  pensions1  may  in  one  sense 
be  regarded  as  a  purely  technical  one,  it  is  in  reality  also  his- 
torical. Only  in  the  light  of  an  understanding  of  the  way  in 
which  the  problem  has  assumed  its  present  form,  and  of  the 
attitude  toward  it  on  the  part  of  both  teachers  and  legislators 
that  has  resulted,  can  the  technical  considerations  developed 
in  the  subsequent  chapters  be  successfully  applied. 

The  history  of  the  movement  for  teachers'  retirement  pen- 
sions in  this  country  may  be  divided  into  three  periods.  The 
first  period  opened  in  1869  with  the  establishment  of  teachers' 
assurance  and  mutual  aid  associations.  The  second  period 
began  in  1894  with  the  securing  of  retirement  legislation,  but 
without  due  regard  to  sound  principles.  The  third  period  is 
now  opening  with  a  movement  toward  reorganization  of  exist- 
ing retirement  funds  and  the  establishment  of  new  funds  on 
a  sound  basis. 

The  leading  role  in  the  movement  during  the  first  two 
periods  was  played  by  the  teachers'  associations.  The  atti- 
tude of  the  government  and  the  public  was  one  of  indifference. 
With  the  new  period,  however,  the  government  and  the  public 
have  begun  to  take  an  active  part  in  the  teachers'  retirement 
movement,  and  an  intelligent  cooperation  between  them  and 
the  teachers  is  developing. 


term  "pension,"  as  applied  to  amounts  paid  to  employees  after 
retirement  from  active  service,  is  objected  to  by  some  as  implying  a  pay- 
ment charitable  in  nature,  that  is,  as  a  gift  for  which  no  full  equivalent 
is  returned  on  the  part  of  the  recipient.  Therefore,  viewing  these  pay- 
ments as  essentially  deferred  payments  for  services  actually  rendered, 
we  find  employed  such  terms  as  "retirement  allowances,"  "retirement 
salaries,"  "service  annuities,"  or  simply  "annuities."  In  this  volume,  how- 
ever, the  writer  has  not  deemed  it  necessary  to  forego  the  use  of  the 
term  pensions,  although,  when  used,  he  does  not  intend  to  imply  that  a 
charitable  element  is  involved. 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Mutual  Aid  Associations.  While  sporadic  organizations  of 
teachers  for  social  or  other  special  purposes  have  no  doubt 
existed  in  this  country  from  early  days,  no  recorded  instance 
of  a  teachers'  mutual  aid  society  is  found  until  1869.  ^n  that 
year,  in  a  certain  large  school  in  New  York  City,  collection 
lists  were  several  times  circulated  among  the  teachers  with  an 
appeal  to  them  to  contribute  towards  the  payment  of  funeral 
expenses  of  a  fellow  teacher  who  had  left  no  funds.  It  then 
occurred  to  Mr.  Vanderbilt,  a  young  and  active  teacher  of  one 
of  the  New  York  City  schools,  that  instead  of  soliciting  volun- 
tary contributions  each  time  a  death  occurred,  it  would  be  far 
better  to  organize  an  association  in  which  each  member  would 
pledge  himself  to  contribute  one  dollar  whenever  called  upon 
and  would  also  be  assured  that  a  similar  benefit  would  be  paid 
upon  his  death  by  a  similar  assessment  upon  all  other  members. 
He  called  a  meeting  of  teachers  and  they  established  the  New 
York  City  Teachers'  Mutual  Life  Assurance  Association. 
The  significance  of  the  establishment  of  this  association  was 
the  fact  that  besides  mere  philanthropy  it  introduced  an  ele- 
ment of  self-protection — the  contributor  not  only  helped  to 
defray  the  expenses  of  funeral  to  a  fellow  teacher  but  also 
secured  a  right  to  a  like  benefit  for  himself.  Probably  no  one 
at  that  time  thought  that  the  establishment  of  this  modest 
organization  marked  the  beginning  of  a  great  mutual  aid 
movement  and  later  on  of  a  pension  movement  among 
teachers. 

In  Brooklyn,  two  years  later,  a  similar  organization  was 
established.  But  the  example  of  the  teachers  of  these  two 
cities  was  followed  by  the  teachers  of  other  cities  only  slowly. 
The  Jersey  City  teachers  founded  an  association  in  the  year 
1880  and  Camden  followed  in  1885.  The  provisions  of  these 
associations  as  compiled  in  1897  are  shown  on  the  following 
page.1 


JThe  following  data  are  extracted  from  a  table  published  in  Review 
of  Reviews,  June,  1897,  p.  711. 


EVOLUTION  OF  TEACHERS'  PENSIONS 


NAME 

Date 
of 
Estab- 
lish- 
ment 

Member- 
ship 

Assess- 
ments 
on 
Call 

Annual 
Dues 

AMOUNT  OF 
BENEFITS 

Annual 
Income 

Capital 

Sick 

Death 

New  York    City 

Teachers'  Mu- 

ual  Life  Assur- 

ance Association 

1869 

2009 

$1 

None 

None 

$500 

None 

Brooklyn  Teach- 

ers' Life  Assur- 

ance Association 

1871 

1557 

$0.50 

g 

« 

$300 

« 

$556 

Jersey  City  Life 

Assurance  Dept. 

'  Teachers'  Asso- 

ciation   

1880 

300 

$1 

a 

« 

$300 

a 

Camden    Teach- 

ers'    Insurance 

Benefit  Associa- 

tion   

1885 

120 

$1 

a 

u 

$120 

« 

The  benefit  provided  in  the  association  of  Camden  was  too 
small  to  cover  more  than  the  bare  funeral  expenses,  but  in 
the  other  associations  the  benefits  provided  the  dependents 
with  a  few  hundred  dollars  above  the  amount  necessary 
for  a  modest  funeral  and  might  therefore  be  properly 
termed  life  insurance.  Viewed  as  measures  of  life  insurance 
these  associations  appear  primitive  and  imperfect.  They  re- 
quired no  regular  annual  assessment  but  assessed  their  mem- 
bers whenever  necessary;  they  had  no  capital  and  they  con- 
sidered capital  unnecessary.  They  did  not  understand  that 
insurance  could  be  sound  only  if  based  on  mortality  tables, 
and  that  the  number  of  deaths  among  their  members  would 
increase  in  the  future  and  would  make  the  assessments  on 
the  younger  members  too  burdensome. 

Sick  Benefit  Associations.  Next  to  the  problem  of  bury- 
ing the  teacher  and  helping  his  dependents  the  problem  of 
the  sick  teacher  and  the  possibility  of  offering  him  at  least 
temporary  relief  attracted  the  attention  of  the  leaders  of  the 
mutual  aid  movement.  Most  of  the  associations  established 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

after  1885  provided  not  only  death  benefits  but  also  sick 
benefits  payable  for  certain  limited  periods.  The  teachers  of 
Detroit  established  such  an  association  in  1888;  those  of  St. 
Paul  did  the  same  in  1890;  the  Chicago  teachers  soon  followed 
in  1891,  and  were  joined  by  the  teachers  of  Des  Moines,  Lin- 
coln and  Evansville.  Meanwhile  a  still  more  rapid  progress 
was  made  in  the  East,  among  the  teachers  of  Rochester, 
Buffalo,  Paterson,  Hoboken,  Trenton,  New  Bedford,  Swarth- 
more,  Scranton,  Baltimore,  Savannah  and  others. 

In  the  development  of  these  sick  benefit  societies,  impor- 
tant improvements  in  the  matter  of  financing  the  benefits  were 
introduced.  Unlike  the  lump  sum  death  benefits,  the  sick 
benefits,  which  had  to  be  paid  day  after  day  to  many  bene- 
ficiaries, could  not  be  financed  by  means  of  sporadic  assess- 
ments and  without  capital  on  hand.  Regular  annual  dues 
were  therefore  introduced  and  the  attempt  made  to  build  up 
permanent  capital  funds.  Nevertheless,  these  associations 
were  just  as  unsound  financially  as  the  pure  life  assurance 
societies  earlier  discussed. 

The  amount  of  dues  and  benefits  and  other  information 
about  some  of  these  associations  are  shown  in  the  table  on 
the  page  opposite. 

Old  Age  and  Disability-Annuity  Associations.  There 
were,  of  course,  numerous  cases  which  the  life  assurance  and 
sick  benefit  associations  could  not  help;  for  example,  that  of 
a  teacher  becoming  permanently  disabled  through  sickness, 
or  becoming  too  old  to  continue  teaching.  Encouraged  by  the 
apparent  success  of  the  life  assurance  and  sick  benefit  funds, 
the  leaders  of  the  teachers  decided  to  take  up  this  difficult 
problem  and  to  organize  associations  which  would  provide 
these  teachers  not  merely  with  temporary  relief  but  with  a 
permanent  and  urgently  needed  one  in  the  form  of  annuities 
payable  to  the  end  of  their  lives. 

The  teachers  of  New  York  City  and  Brooklyn  were  the 
pioneers  of  this  movement.  They  established  their  voluntary 

6 


EVOLUTION  OF  TEACHERS'  PENSIONS 


c 

§       E 

5 

^       £ 

a 

'Si 
0 

1   II 

11    11 

§ 

g  co 

o  cd          co 

rH 

2  o 
II 

r-T 

y?         O 
t>.         <5 

in         •-« 

1 

S 

^      "2 

§         §88         8 

8       •" 

S 

2           3 
Ed         fc- 

^                cd  ^5. 

z 

fl 

« 

5 

1     S 

8|      st  83       | 

^\                 ^^ 

•«5        -"3           r" 

O/—  i   5? 

»       o^-o 

s       15 

<:     £ 

t**  QJ         in  S     co  35         *y 
(••p   •     ci  a          ^         ^ 

in  25     t^  a)          h 
tt          ^         > 

,-j 

Is 

SO             Q                   Q 
in         o            in 

8      8      8         S 

8 

g                        M                 rH 

<« 

CO 

iis 

en  o>w 

8         2      8          S 

•                                      o 

<l>                i>                      C. 

§     §       § 

o 
^ 

^*     o 

|| 

^88- 
co         S3 

IO            ^^                 O 
CO             t*»                  ^ 

s 

1" 

i-t                rH 

CO 

'o  A  C 

rH                  CO                           •* 

-*                10                      <0 

cu  ca  e 

Oi            Oi                 O* 

O^            CT)                 ^ 

o^ 

<5flj 

00             00                   00 

rH                 rH                         rH 

r-4               »H                       r- 

00 

rH 

CO                         —     -                                          C3 

d             ca.2         ^Q         -3 

"3        e.s     3,      s 
Se      ^|      o      | 

»       <                                                   (Q 

cw  •  *3                ^            t^           «. 

1           1 

•§         •§       S  > 

'to              O          ^-5 

Teachers' 
xiation  

• 
1 

11      -1 

SI         tfS        t        E§ 

li    11   t  * 

||       5^        x       g§ 

j>CQ          Jg2         g          «'iS 

U                           C/}                           »->                 &4 

^  .2         2        •M'tf 
S-2        |        G^ 

#1                      S                     r^f 

IS     s    ^1 

£3               *S 

o            Si         S 
ffi            HZ 

Baltimore  City 
Beneficial  Ass< 

•5 


•5 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

annuity  associations  in  the  year  1887.  From  New  York  this 
idea  was  carried  to  Boston,  where  it  resulted  in  the  establish- 
ment of  a  similar  association  two  years  later.  Philadelphia 
followed  in  1890;  Cincinnati  in  1891;  Massachusetts,  Wash- 
ington, D.  C,  Connecticut,  Baltimore  and  other  cities  and 
states  during  the  next  few  years. 

The  establishment  of  these  and  other  associations  of  the 
same  type  met  a  great  need  among  teachers.  For  the  first 
time  in  the  history  of  the  educational  system  in  this  country, 
there  was  brought  before  the  teachers  and  before  the  public 
the  problem  of  the  retirement  of  the  aged  and  disabled  teacher. 

The  provisions  of  most  of  these  funds  were  patterned  after 
the  provisions  of  the  New  York  fund.  In  most  of  them  annu- 
ities were  fixed  at  $600,  the  exceptions  being  the  associations 
of  Cincinnati  and  Omaha,  with  annuities  of  $500  and  $400 
respectively,  and  the  association  of  Brooklyn  which  provided 
annuities  of  one-half  the  fixed  salary  of  the  retiring  teacher. 
Annuities  were  to  be  paid  to  those  members  who  retired  from 
the  teaching  service  under  either  of  the  following  condi- 
tions: (i)  completion  of  a  certain  length  of  service,  which 
varied  from  30  to  40  years  in  different  systems,  frequently 
with  a  lower  requirement  by  five  years  for  women  than  for 
men;  (2)  a  proof  of  disability,  irrespective  of  the  length  of 
service.  The  money  necessary  for  the  payment  of  these 
benefits  was  to  be  provided  by  means  of  annual  dues  from 
the  members  of  the  association  at  the  rate  of  I  per  cent  of 
their  salary  and  was  to  be  supplemented  by  donations  and 
voluntary  contributions  from  the  public. 

Several  of  the  new  associations  combined  life  insurance, 
sick  benefits  and  annuities.  The  Philadelphia  fund,  estab- 
lished in  1890,  and  the  Washington,  D.  C.  fund,  established 
in  1894,  were  of  this  type.  The  constitution  of  the  Phila- 
delphia fund  stated  that : 

The  object  of  this  association  shall  be  to  provide  for  and 
to  furnish  pecuniary  aid  from  time  to  time  to  such  of  its 

8 


EVOLUTION  OF  TEACHERS'  PENSIONS 


ca  ca 

CO 

W  c 

ai-U 

ca  c 

ca^ 

• 

a 

ca 

P* 

S 

£  ca 

pa 

Pa 

& 

& 

* 

§co" 

§co 

§& 

§CD 

o 

•a 

1 

^ 

*J 

-J 

§ 

8  a 

.• 

. 

^ 

C?  ca 

Ow 

;    <a 

t**^  rt 

O  flJ 

CM  ca 

A 

•g-o 

^^ 
o  — 

I1 

§1 

•g-§ 

•§J 

•g"0 

•8-* 

c 

!l. 

.—  ca 

li 

If 

£-0 

<_  o 

IE 

IE 

8 

O"~  O 

"o^1 

"o"*" 

o*~ 

"3^ 

"o^3 

'oi 

H 

§'T3  41 

.TJ 

.T3  C 

§*T3  i! 

.•a 

"O 

»*o 

_ca 

11     - 

§• 

§£  « 

^  rt 

§y  nj 

§4) 

§4> 

§p 

ca 

-  3  u 

| 

5  r 

oTol 

h  r3 

| 

^ 

o 

3 

s» 

.  O 

b-  C) 

r-"o>  « 

^  w*Q 

g!J 

*   CO 

u 

CO  ^ 

CO 

to"  cu 

5" 

JZ 

a> 

4) 

CU 

ca 

C 

e 

Q 

C 

o 

• 

0 

o 

O 

0 

o 

Q 

Z 

z 

•H 

Z 

r~* 

-^   CO 

c 

00> 

c 

CO 

cu 

c 

2o 

o  cu 

o 

•~*  ^ 

''w 

0 

S 

(73  c 

Z 

&$       ^ 

Z 

Z 

Z 

eS6* 

1 

>> 

§•- 

S-S 

e 

s 

B 

e 

B 

• 

o       ^ 

>>  u 

*y  * 

cu 

j* 

cu 

o 

cu 

<      -° 

(2               CO 

toj! 

c 

j 

c 

CM 

CO 

in 

CO 

LO 

in 

s    s 

ll 

z 

1 

s 

cu 

s 

S 

4) 

i 

53 

2 

< 

< 

< 

< 

5! 

3 

« 

in 

CO 

o 

CO 

in 

CO 

d 

CO 

in 

CO 

"o  g 

E 

E 

E 

E 

| 

S 

O 

cu 

Q> 

Q 

ca  u 

(^ 

fa 

fo 

£ 

£ 

in 

fa 

CO 

CO 

bn  (/5 

O 

in 

6 

o 

in 

6" 

^p 

CO 

CO 

s 

2 

S 

s 

2 

3 

•-  E  •  >> 

Q 

1-1 

p 

0 

0 

0 

o 

0 

•1  11^'^ 

e 

X-3 

s 

S 

S 

8 

CO 

o 

2  £     c 

CO 

SO 

* 

* 

6^ 

(# 

B 

C3 

_ 

b 

M 

c 

1 

| 

b 

•M 

r^-cS 

b 

b 

i 

£r 

loo 

i 

a 

"ca 

cent  sala 

r  cent  am 
salary 

"H  w 
o  5 

cent  sala 

cent  sala 

5  & 

<ba 

cent  sala 

=5 

S6 

al 

A—  $10. 
B—  $5 

c 
C 

a 

a§5 

a 

o 

a 

III 

a 

*a 

CO    CO 

ca  ca 

t* 

-• 

^° 

•* 

CM 

s 

-1 

OMU 

-- 

^ 

Oo 

d 

E^.9- 

s 

8 

CM 
T* 

0 

s 

0 

in 

s 

8 

|' 

&  5^  J 

i-H 

S 

Oi 

CO 

CO 

CO 

CO 

^- 

<    M 

W 

f-4 

j 

CJ        i     ,    *J 

t;—  ca.e  e 
^°^.2p 

1 

t~. 

S 

8 

00 

1 

S 

00 

00 

(D 
00 

CT: 

00 

CO 

| 

—i 

2 

< 

New  York  City 
Teachers'  Mutual 
Benefit  Association 

BrooklynTeachers' 
Aid  Association 

Boston  Teachers' 
Mutual  Benefit  As- 
sociation 

Philadelphia  Tea- 
chers' Annuity  and 
Aid  Association 

Cincinnati  Teach- 
ers' Aid  and  An- 
nuity Association 

Massachusetts 
Teachers'  Annuity 
Guild 

Washington,  D.C., 
Teachers'  Annuity 
and  Aid  Association 

ConnecticutTeach- 
ers'  Annuity  Guild 

Baltimore  Teach- 
ers' Mutual  Benefit 
Association 

Omaha  Teachers' 
Annuity  and  Aid 
Association 

1  Review  of  Revie 

TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

members  as  shall  be  incapacitated  from  teaching  in  the  pub- 
lic schools  of  the  city  of  Philadelphia  by  reason  of  sickness 
or  advanced  age — and  also  to  receive,  hold  and  expend  dona- 
tions of  money  for  aid  of  other  teachers  not  hereinbefore  pro- 
vided for  in  such  manner  as  the  donors  may  prescribe. 

In  framing  the  provisions  of  these  associations  and  in  mak- 
ing their  appeals  for  members,  the  promoters  of  this  move- 
ment had  to  take  into  account  the  differences  between  the 
older  and  younger  teachers  and  between  the  lower  and  higher 
paid  individuals.  In  the  case  of  the  older  teachers  an  appeal 
could  be  made  on  the  ground  of  personal  advantage.  The 
older  teachers  were  entering  the  associations  mainly  with  a 
view  to  protecting  themselves  against  becoming  dependent  in 
their  old  age.  They  realized  that  in  return  for  their  small 
contributions  the  associations  offered  them  an  annuity  which 
no  insurance  company  would  offer  them  at  the  same  price.  If 
they  joined  the  fund  they  could  soon  apply  for  these  benefits. 
They  had  little  to  lose  and  much  to  gain;  therefore,  they 
cheerfully  joined  the  associations.  For  this  reason  the  major- 
ity of  the  membership  of  these  associations  consisted  of 
older  teachers. 

A  different  appeal  had  to  be  made  to  the  younger  teachers, 
for  they  did  not  fear  the  coming  of  old  age  and  did  not  seek 
to  protect  themselves  against  distant  risks.  The  time,  thirty 
or  forty  years  distant,  when  they  could  claim  the  benefits  from 
the  fund  seemed  so  remote,  the  possibility  of  remaining  so 
long  in  the  service  seemed  so  dubious,  and  the  reasons  for 
worrying  about  the  dim  future  so  slight,  that  they  cared  little 
whether  or  not  they  would  ever  receive  any  benefits  from  a 
fund.  Besides,  they  wanted  their  entire  salary  for  their  imme- 
diate enjoyment  and  did  not  care  to  deprive  themselves  of  even 
i  per  cent  of  that  salary  for  the  sake  of  that  vague  future. 
For  this  reason  it  was  extremely  difficult  to  make  the  young 
teachers  enter  the  societies.  And  yet  they  constituted  the 
greater  number  and  it  was  upon  their  support  that  the  success 
of  the  associations  depended.  The  few  young  teachers  who 

10 


EVOLUTION  OF  TEACHERS'  PENSIONS 

did  join  the  associations  did  so  mainly  to  help  the  older  mem- 
bers of  the  profession.  The  small  expense  connected  with 
membership  they  justified  as  their  contribution  to  the  welfare 
of  the  profession.  Only  by  appealing  to  their  idealism  could 
the  promoters  of  the  associations  succeed  in  soliciting  their 
support. 

No  serious  conflict  between  the  lower  and  higher  paid  teach- 
ers arose,  however,  in  this  movement.  The  lower  grade 
teachers  were  in  the  majority  and  favored  the  idea  that  all 
members,  regardless  of  their  salary,  should  receive  the  same 
amount  of  benefit  but  should  pay  for  it  in  proportion  to  their 
salary.  In  this  way  they  would  bear  a  smaller  part  of  the 
burden  than  the  higher  paid  teachers.  The  latter,  expecting 
soon  to  retire,  readily  agreed  to  pay  the  higher  rate. 

Brooklyn  was  the  only  fund  which  adopted  a  different 
principle,  i.  e.,  that  members  should  contribute  in  proportion 
to  their  salary  and  should  also  receive  benefits  proportionate 
to  their  salaries.  This  principle  was  far  less  popular  with 
the  lower  grades  and  did  not,  therefore,  gain  wide  acceptance 
in  the  mutual  aid  movement. 

In  fixing  the  rate  of  contributions  the  promoters  of  the  as- 
sociations had  to  take  into  account  the  fact  that  most  of  the 
teachers  would  not  enter  the  association  if  a  high  rate  of 
contributions  were  required.  For  this  reason  a  contribution 
of  i  per  cent  of  salary  was  adopted. 

A  very  important  question  with  regard  to  contributions  of 
the  teachers  whose  connection  with  the  association  would 
terminate  through  resignation,  dismissal  or  death  before  they 
completed  the  required  length  of  service  came  now  to  light. 
The  principle  was  adopted  that  they  should  forfeit  all  their 
contributions,  and  that  the  forfeited  contributions  should  be 
used  to  augment  the  fund  available  for  the  payment  of  bene- 
fits to  those  teachers  who  survived,  completed  the  required 
period  of  service,  and  were  thus  entitled  to  retirement.  These 
forfeitures  were  considered  as  one  of  the  most  important 

II 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

sources  of  revenue  of  the  associations.  This  principle,  as 
applied  to  the  retirement  problem,  was  borrowed  from  the 
oldest  retirement  funds  abroad,  where  it  is  known  under  the 
name  of  "tontine."  In  some  associations  a  teacher  who  re- 
signed or  was  dismissed  received  a  refund  of  one-third  of  the 
amount  contributed.  Objections  raised  even  to  partial  re- 
funds were  to  the  effect  that  the  interests  of  the  individual 
who  resigned  or  was  dismissed  from  the  profession  deserved 
less  consideration  than  the  interests  of  the  entire  profession.1 

Attitude  of  Government  and  Public.  The  government 
took  no  interest  in  the  mutual  aid  movement  among  the 
teachers.  It  saw  no  reason  for  interfering  in  what  it  re- 
garded as  a  private  teachers'  association.  Neither  did  the 
teachers  seek  the  assistance  of  the  government  in  the  affairs 
of  their  organizations.  At  that  time  they  were  probably  as 
reluctant  as  the  government  to  admit  any  form  of  paternal- 
ism. In  this  respect  both  sides  followed  the  traditions  of  the 
American  government  and  of  American  public  opinion. 

Neither  the  teachers  nor  the  government  officials  then 
realized  that  the  participation  of  the  government  in  this  move- 
ment was  desirable  on  the  ground  that  an  unsatisfactory  solu- 
tion of  the  old  age  and  disability  problem  in  the  teaching  serv- 
ice vitally  affects  the  efficiency  of  that  service  and  the  inter- 
est of  the  schools.  The  idea  of  efficiency  of  service  then  did 
not  occupy  as  prominent  a  position  in  the  mind  of  the  gov- 
ernment administrator,  the  government  employee  and  the  pub- 
lic at  large  as  it  does  to-day.  Government  was  managed  loosely 
and  public  opinion  was  not  as  self-conscious  and  as  effective 
as  it  is  at  the  present  time. 

At  the  same  time  the  teachers  felt  that  their  cause  deserved 
a  sympathetic  attitude  from  the  public  and  that  they  could 
obtain  voluntary  contributions  from  the  public  without  hav- 
ing recourse  to  the  governmental  machinery  and  incurring 
the  danger  of  falling  under  its  control.  Realizing  the  need 

"The  inequitable  features  of  the  "tontine"  are  more  fully  discussed 
on  pp.  108,  109. 

12 


EVOLUTION  OF  TEACHERS'  PENSIONS 

for  a  larger  capital  and  the  inadequacy  of  their  own  con- 
tributions, they  set  to  work  arranging  bazaars  for  the  benefit 
of  the  associations,  soliciting  the  aid  of  charitable  ladies  and 
collecting  funds  among  public-spirited  citizens. 

The  public  responded  generously  to  the  teachers'  campaign. 
A  most  successful  bazaar  was  arranged  in  Boston,  by  which 
more  than  $56,000  was  raised.  During  the  first  twelve  years 
of  the  existence  of  the  New  York  City  association,  the  teach- 
ers accumulated  from  their  own  contributions  about  $64,000 
and  added  to  this  about  $76,000  from  bazaars  and  private 
donations.  In  Brooklyn,  Philadelphia,  Washington,  D.  C, 
and  Baltimore,  the  associations  secured  more  than  half  of 
their  capital  by  means  of  bazaars  and  voluntary  contributions 
from  the  public. 

Failure  of  Annuity  Associations.  Soon,  however,  certain 
features  of  the  annuity  associations  met  with  criticism.  In 
the  first  place  the  voluntary  feature  caused  disappointment 
to  their  promoters  because  the  teachers  responded  so  slowly 
to  their  appeals.  The  promoters  became  tired  of  the  continu- 
ous campaign  to  secure  members,  and  began  to  favor  the  in- 
troduction of  some  measure  which  would  compel  all  teachers 
to  join  the  associations  and  thus  increase  its  income. 

Secondly,  the  private  character  of  these  associations  was 
objected  to.  It  was  urged  that  the  retirement  of  old  teachers 
benefited  the  schools  and  should,  therefore,  be  made  a  matter 
of  governmental  concern.  The  following  extract  from  a  re- 
port of  the  Boston  Mutual  Benefit  Association,  which  appeared 
in  1894  in  the  annual  report  of  the  Boston  superintendent  of 
schools,  illustrates  this  idea: 

But  for  this  beneficent  institution  many  of  these  teachers 
would  still  be  in  the  employ  of  the  city  although  unable  to  do 
satisfactory  work  because  of  ill  health  or  the  infirmities  of 
age.  They  have  now  given  place  to  younger  and  more  effi- 
cient teachers  and  the  city  secures  the  benefit  while  from  the 
association  they  receive  a  comfortable  income.  Nor  is  this  all. 
The  nearly  1000  members  feeling  far  less  anxiety  for  the 

13 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

future  because  of  membership,  are  daily  doing  better  work 
than  they  could  do  if  the  shadows  of  coming  adversities  were 
ever  resting  upon  them. 

The  methods  of  securing  the  financial  support  of  the  public 
by  appealing  to  individual  philanthropy  were  also  criticized 
because  the  income  they  provided  was  irregular  and  after  all 
inadequate. 

Criticism  centered  on  these  defects.  The  less  apparent  but 
more  fundamental  defect — their  actuarial  unsoundness — 
escaped  attention.  To  organise  a  sound  annuity  system  is 
not  an  easy  task.  It  involves  the  use  of  mortality  rates,  in- 
terest tables  and  mathematical  formulae,  by  means  of  which 
an  actuary  can  determine  the  cost  of  the  annuities  and  the 
amount  of  premiums  which  should  be  charged  at  different 
ages.  The  annuity  systems  of  every  insurance  company  are 
organized  upon  this  basis.  But  the  mutual  aid  and  annuity 
systems  of  the  teachers  were  not  thus  organized.  Their  pro- 
moters thought  that  they  could  operate  them  without  using 
mortality  tables  and  without  knowing  the  cost  of  annuities, 
and  that  they  could  require  the  same  dues  of  all  members  and 
pay  the  same  annuities  to  all,  regardless  of  the  difference  in 
their  ages.  They  fixed  the  dues  at  the  uniform  and  entirely 
inadequate  rate  of  I  per  cent  of  salary,  and  they  wrongly  ex- 
pected that  the  voluntary  contributions  from  the  citizens  would 
sufficiently  supplement  the  fund. 

Of  course,  with  such  serious  defects  these  associations  could 
not  permanently  exist.  During  the  first  few  years  when  re- 
tirements were  not  numerous  and  the  disbursements  were 
small,  their  income  appeared  more  than  adequate.  However, 
in  the  course  of  time  the  insufficiency  of  their  income  was 
bound  to  appear. 

The  first  association  to  which  this  happened  was  that  of 
Brooklyn.  New  York  City  and  other  associations  were  next 
affected.  The  disbursements  exceeded  the  receipts,  benefits 
were  prorated  and  their  capital  reduced.  The  old  members 

14 


EVOLUTION  OF  TEACHERS'  PENSIONS 

faithfully  remained  in  the  fund,  because  they  still  expected  to 
receive  some  benefits  from  it,  but  the  young  members  imme- 
diately lost  all  interest  for  the  "lost  cause"  and  withdrew 
in  large  numbers.  These  withdrawals  caused  a  further  panic 
among  the  members  of  the  organizations  and  thus  accelerated 
their  collapse. 

The  Beginnings  of  Unsound  Legislation,  1894-1896. 
The  idea  that  soldiers  and  public  employees  should  be  "pen- 
sioned" for  their  public  services,  i.  e.  should  receive  on  their 
retirement  from  the  active  service  an  annuity  payable  to  the 
end  of  their  lives  either  entirely  or  partly  at  the  expense  of 
the  government,  or,  if  at  no  expense  to  the  government,  at  least 
under  its  management,  and  that  such  "pensions"  should  be 
established  and  governed  by  special  laws,  was  imported  to 
this  country  from  Europe.  There  pension  laws  for  the  army 
and  navy  and  the  state  and  municipal  employees,  including 
teachers,  had  existed  for  many  years. 

In  the  United  States  this  idea  was  applied  first  to  the  army 
and  navy,  next,  in  1859,  to  the  policemen  in  the  larger  cities, 
and  later  to  the  firemen.  But  it  was  not  at  first  applied  to 
teachers.  A  comparison  in  the  minds  of  the  teachers  of  their 
status  with  that  of  the  teachers  abroad  and  the  policemen  and 
firemen  in  this  country  was,  therefore,  inevitable.  As  early 
as  1879  and  1881  in  New  York  City  and  Brooklyn,  and  in 
1891  in  New  Jersey,  small  groups  of  teachers  were  discussing 
the  idea  of  obtaining  pension  legislation.  Two  tendencies 
were  apparent;  one  in  favor  of  a  straight  pension  payable 
entirely  at  the  expense  of  the  government,  the  other  in  favor 
of  the  establishment  of  a  contributory  retirement  fund.  The 
first  made  little  headway,  as  public  opinion  was  opposed  to  it. 
The  latter  made  no  considerable  progress  until  a  few  years 
after  the  establishment  of  the  first  private  annuity  associa- 
tions. Then  it  began  rapidly  to  gain  in  strength,  scope  and 
clearness.  In  the  first  place,  the  operation  of  these  associa- 
tions strongly  supported  the  contention  that  the  retirement  of 

15 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

old  teachers  benefited  the  schools  and  the  government  and 
should,  therefore,  be  made  to  some  extent  a  matter  of  govern- 
mental concern. .  In  the  second  place,  the  apparent  weakness 
of  these  voluntary  associations  offered  strong  support  to  the 
idea  that  legislation  should  be  secured  officially  establishing 
retirement  systems,  compelling  the  teachers  to  enter,  and  mak- 
ing detailed  provisions  for  their  retirement.  Lastly,  the  ob- 
vious insufficiency  of  the  income  of  the  annuity  associations 
and  the  disappointment  in  private  philanthropy  as  a  source  of 
income  fostered  the  idea  that  the  government  should  bear 
either  a  partial  or  entire  responsibility  for  the  adequacy  of  the 
retirement  funds. 

Weak  attempts  to  secure  pension  legislation  were  made  in 
New  York  City  and  Brooklyn  as  early  as  1879;  and  such 
attempts  were  from  time  to  time  repeated  by  the  teachers  of 
that  city  and  of  other  cities  in  various  parts  of  the  country. 

The  board  of  education  in  New  York  City  was  opposed 
to  retirement  legislation  and  the  task  of  winning  over  the 
legislators  and  the  governor  was  a  difficult  one.  In  1894,  after 
several  failures,  the  teachers  prepared  a  very  mild  measure.  | 
It  provided  for  the  establishment  of  a  fund  the  resources  of 
which  were  to  come  from  deductions  made  from  the  pay  of 
the  teachers  because  of  absence.  No  contributions  were  re- 
quired of  the  teachers.  Despite  the  opposition  of  the  board 
of  education,  the  support  of  the  governor  was  secured  and 
thus  in  1894  the  first  legislation  creating  a  teachers'  pension 
fund  in  this  country  was  enacted. 

It  is  notable  that  this  pioneer  legislation  should  have  adopted 
no  definite  principle  in  the  matter  of  whether  the  teachers  or 
the  government,  or  both  sides,  should  support  the  system.  The 
form  of  revenue  was  such  as  to  obscure  its  real  derivation. 
It  was  generally  accepted  that  the  revenue  from  absence  de- 
ductions was  derived  from  the  teachers,  although  as  a  matter 
of  fact  it  really  came  from  the  public  treasury.1 

'The  fund  was  also  authorized  by  the  law  to  receive  donations,  lega- 
cies, etc. 

16 


EVOLUTION  OF  TEACHERS'  PENSIONS 

Pensions  of  one-half  of  the  final  salary,  not  exceeding 
$1,000,  could  be  granted  by  a  two-thirds  vote  of  the  board  of 
education  to  teachers  mentally  or  physically  disabled  for  the 
performance  of  duty,  upon  the  recommendation  of  the  city 
superintendent.  The  service  requirement  was  30  years  for 
women  teachers,  and  35  years  for  men  teachers.  The  board 
of  education  was  given  complete  charge  of  the  fund  and  the 
establishment  of  by-laws  for  its  management.  It  was  em- 
powered to  reduce  pensions  to  a  uniform  rate.  The  comp- 
troller of  the  city  was  made  treasurer  of  the  fund. 

The  establishment  of  the  New  York  City  fund  was  the  sig- 
nal for  renewed  activity  on  the  part  of  the  teachers  in  other 
cities;  bills  were  prepared  in  some  places  by  copying  almost 
verbatim  the  New  York  City  law,  and  in  the  two  years  fol- 
lowing no  less  than  eight  other  funds  were  created.  In  1895 
funds  were  established  in  Brooklyn,  Detroit,  Chicago,  St. 
Louis  and  San  Francisco;  and  in  1896  in  Buffalo,  Cincinnati 
and  the  state  of  New  Jersey.  In  every  case  membership  in 
the  fund  involved  a  contribution  to  it.  In  three  cases — San 
Francisco,  St.  Louis  and  New  Jersey — membership  was  vol- 
untary; in  the  other  five  funds  it  was  compulsory. 

Voluntary  Funds  Supported  by  Contributions.  While 
the  San  Francisco  and  St.  Louis  funds  were  established  in 
1895,  'a  year  previous  to  the  establishment  of  the  New  Jersey 
fund,  the  history  of  the  latter  is  perhaps  the  most  illuminating. 
The  bill  providing  for  the  New  Jersey  fund  was  first  intro- 
duced in  the  legislature  in  1891,  and  called  for  a  pure  and 
simple  half-pay  pension,  to  be  paid  entirely  by  the  govern- 
ment. The  repeated  defeat  of  this  measure,  which  sought 
at  a  stroke  to  legislate  in  the  most  extreme  form  of  govern- 
ment pension  systems,  finally  caused  the  proponents  of  the 
measure  to  abandon  their  proposal  in  favor  of  a  plan  for  a 
voluntary  self-sustaining  fund — in  effect  a  mutual  old  age 
and  invalidity  insurance  association,  with  the  state  as  custo- 
dian and  administrator  of  the  funds.  In  this  form  the  meas- 
ure became  law  in  1896. 

17 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Under  the  provisions  of  the  law,  membership  in  the  funds 
was  purely  voluntary;  members  were  to  contribute  i  per  cent 
of  their  salary  and  were  to  receive  on  disability  after  20 
years  of  service  an  annuity  of  one-half  of  their  salary,  with 
a  minimum  of  $250  and  a  maximum  of  $600.  After  the  pas- 
sage of  the  law  teachers  had  only  three  months  in  which  to 
join. 

The  difficulties  involved  in  framing  a  pension  system  satis- 
factory to  all  elements  were  not  escaped  in  this  early  attempt. 

Not  a  provision,  not  a  clause  does  this  law  contain  that  has 
not  been  objected  to  by  some  teacher  or  by  the  press.  Young 
teachers  found  twenty  years  too  long;  older  teachers  found  it 
too  short,  and  feared  that  it  might  operate  against  their  tenure 
in  office.  The  former  thought  twenty  years  should  not  be 
coupled  with  disability;  the  latter  thought  it  should.  Low 
salaried  teachers  said  one  per  cent  assessments  were  too  small ; 
principals  and  superintendents  said  it  was  too  large.  Women 
thought  we  could  not  afford  a  maximum  annuity  of  $600 ;  men 
thought  it  too  low.  The  press  warned  the  teachers  'if  you  go 
in  you  cannot  get  out.'  Teachers  complained  about  the  limited 
time  given  them  for  decision.  Those  who  joined  it  thought 
all  should  be  compelled  to  join  and  the  philanthropic  said 
the  rebate  clause  was  unnecessary.  Certain  principals  influ- 
enced their  teachers  not  to  join.  Others,  willing  to  help  any 
advance  in  the  right  direction,  swung  with  full  corps  into  line. 
Two  places  reported  a  meagre  membership  assigned  as  the 
reason  that  their  teachers  were  from  other  states  and  did  not 
expect  to  remain  in  New  Jersey.  The  others  were  young  and 
would  probably  marry.1 

The  table  on  page  19  shows  the  principal  features  of  the  San 
Francisco,  St.  Louis  and  New  Jersey  voluntary  funds : 

It  is  of  interest  to  note  that  the  membership  of  each  of 
these  funds  was  less  than  one-half  of  the  number  of  teachers 
eligible,  and  that  the  rates  of  contribution  were  so  inadequate 
that  after  two  years  the  larger  part  of  their  income  had  to  be 

'Article  of  Miss  E.  A.  Allen  in  Review  of  Reviews,  June,  1897. 

18 


EVOLUTION  OF  TEACHERS'  PENSIONS 


IISlI 

" 


~.   V 


O   C        o 

t!  fe    N 

b.o 


2  5 

03  C$ 
CO          CO 


Bog 


-1  Q 
<£>  <f> 
Tf  in 


o 

I—  I 

in 


W  » 


o     ^o  ^* 

C?5     c-»  oo 

cs     in  co 

^H  in 


in 

oo 


1 

C         .JO 

2      3 


C/5 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

used  for  the  payment  of  benefits,  leaving  only  a  small  portion 
of  the  income  to  be  set  aside  as  a  reserve.  The  New  Jersey 
fund  was  forced  every  few  years  thereafter  to  seek  amend- 
ments allowing  the  teachers  another  opportunity  to  join  the 
fund  and  offering  them  various  inducements.  Seven  years 
later  it  was  necessary  to  secure  an  amendment  doubling  and 
even  trebling  the  rates  of  contribution  and  adopting  the  com- 
pulsory basis  for  all  new  teachers. 

Compulsory  Funds  Supported  by  Contributions.  As  al- 
ready indicated,  the  legislation  adopted  for  Brooklyn,  Buffalo, 
Cincinnati,  Detroit  and  Chicago  in  the  years  1895-96  was 
compulsory  in  character.  The  Brooklyn  system  differed  from 
all  the  others,  however,  in  that  under  it  the  strictly  compul- 
sory feature  covered  only  the  new  entrants.  An  option  was 
given  to  teachers  then  in  the  service  to  join  or  not  to  join  the 
fund,  but  once  the  option  was  exercised,  the  decision  could 
not  be  changed.  This  semi-compulsory  feature  was  a  com- 
promise between  the  opponents  and  proponents  of  compulsion, 
and  helped  to  overcome  the  opposition  of  some  elements  in 
the  teaching  force. 

It  is  interesting  at  this  point  to  compare  the  effects  of  grad- 
ual and  violent  movements.  Having  started  with  a  mild  meas- 
ure the  leaders  of  the  movement  in  Brooklyn  succeeded  in 
their  subsequent  attempt  to  extend  the  compulsory  feature  to 
all  teachers.  On  the  other  hand,  in  Chicago,  the  thorough- 
going compulsory  feature  created  a  reaction  against  the  meas- 
ure and  against  its  former  leaders,  resulting  in  legislation  re- 
pealing the  compulsory  law  and  reverting,  to  an  entirely  volun- 
tary provision.  This  extreme  in  turn  almost  wrecked  the 
fund  and  led  to  another  movement,  this  time,  happily,  for  a 
mild  compulsory  law. 

The  provisions  of  the  early  compulsory  funds  under  dis- 
cussion are  shown  in  the  table  on  the  page  opposite. 

It  is  to  be  noted  that  in  the  case  of  all  these  funds  the  teach- 
ers contributed  i  per  cent  of  their  salary,  whereas  the  govern- 

20 


EVOLUTION  OF  TEACHERS'  PENSIONS 


"3 

g 

8    8 

s 

g 

• 

& 

o 

re 

I*SO 

CO        C""" 

CO 

J 

Oi 

CM     in 

M 

VI 

^ 

S"~* 

0 

8    8 

Q 

O 

g 

8 

c 

qg 

B 

I 

oo     in 

in 

1 

o>     o 

(M 

o 

&5 

£75 

O*i 

o 

> 

$ 

in     •* 

CM 

CO 

ANNUITY 

If 

1 

§1 

1 

o 

s 

i 

II 

1 

Cj            C^ 

a     a 

rt 

ex 

1 

1 

•] 

<f> 
H 

Length  of 

service 
Required  for 
Retirement 

JU 

£13 

om 
coco 

"^  jy 

oin 

13 

O) 

15  or  30  fem. 
!0  or  35  male 

13 

1 

o 

CM 

o  o 

£-5 

to 
.S   c 

J-o 
•S  o 

to  CQ 

H 
& 
g 

3UTIONS 

«§ 

•8J 

<U   0 

0          0> 

c      c 
o      o 

z  2 

o 

O 

1 

_S_C 

CONTRI 

2 

D 

II 

c$       cj 
ra        co 

.—  i      i—  i 

i—  i 

i—  i 

1 
i—l 

"oj 

g 

CO        O 
OI       O 

o 

8 

O 

•    plt  J-J 

d  E 

s 

>—  1        OJ 

cq     in 

^ 

t—  i 
i—  i 

Ol 

^  (L)    to 

^ 

-  4)   I* 

•s| 

CO 

CO 

0       0 

o 

8 

0 

""a0 

^1 

i 

s  <* 

*~*  ^^ 

"o 

ji  S 

_ 

in     in 

in 

CO 

CO 

i  G  « 

a 

1 

CT>        <J5 
00        00 

Ci 
00 

00 

•~  o« 

0 

(V         O 

0 

Til 

Q 

M 

Jl 

^j    Q<  ;> 

Z 

1 

§    1 

4-  ) 

'e 

£ 

13 

1 

'1  l«i 

& 

O) 

2; 

2      ° 

1  6 

-M 

S 

1 

n 

D 

u 

"     " 

21 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ment  did  not  contribute  at  all,  and  that  the  benefits  were  fixed 
at  one-half  of  the  salary.  The  principle  of  a  pension  propor- 
tionate to  salary,  which  a  few  years  before  was  recognized 
only  by  the  Brooklyn  Aid  Association,  was  thus  adopted  in  all 
the  five  compulsory  funds  and  was  soon  to  become  almost 
universal. 

Unsoundness  of  the  Early  Funds.  The  several  pioneer 
funds,  to  which  attention  has  been  given,  varied  in  matters  of 
detail,  but  they  were  all  alike  in  the  unsoundness  of  the  pro- 
vision made  for  their  financial  stability.  They  followed  the 
unsound  method  which  had  been  used  by  the  mutual  aid  asso- 
ciations; pensions  were  paid  from  the  annual  income  of  the 
fund,  and  the  balance  of  the  income  set  aside  as  capital".  No 
mortality  rates  were  adopted  and  no  attempts  were  made  to 
determine  the  cost  of  retirement  benefits,  the  liabilities  of  the 
fund  to  all  its  members,  or  the  amount  of  income  and  reserve 
which  the  fund  should  possess  if  it  was  in  the  future  to  meet 
its  obligations.  In  most  of  the  systems  a  provision  was 
adopted  that  in  case  of  insufficiency  of  fund  the  benefits  might 
be  prorated,  but  it  was  optimistically  thought  that  this  would 
never  happen. 

In  some  cases  fair  warning  was  given.  At  the  establish- 
ment of  the  New  Jersey  retirement  fund  an  actuary's  report 
was  published  in  the  press,  in  which  the  progress  of  the  fund 
was  estimated  for  the  next  twenty  years  and  the  demonstra- 
tion made  "in  plain  figures  that  on  the  most  favorable  esti- 
mates the  fund  must  fall  far  behind  the  demands  made  upon 
it.  More  than  half  the  income  needed  to  meet  obligations  is 
provided  for  only  by  hopes."  But  the  promoters  of  the  early 
retirement  funds  scorned  any  suggestion  that  actuarial  meth- 
ods should  be  invoked.  In  replying  to  an  actuary's  criticism 
of  one  of  these  annuity  systems,  its  secretary  wrote  that 
"purely  business  principles  would  dictate  that  we  make  all 
restrictions  as  to  age,  health,  etc.  that  insurance  companies 
do"  as  if  the  entire  technique  of  insurance  companies  in- 

22 


EVOLUTION  OF  TEACHERS'  PENSIONS 

volved  nothing  else  but  the  making  of  a  few  simple  restric- 
tions. And  again,  "We  have  hearts  ready  to  respond  to  our 
needy  ones  and  hands  willing  to  work  for  them.  Can  the 
'expert'  credit  these  to  the  assets  of  his  insurance  company?" 
The  inevitable  fruits  of  such  an  attitude  as  this  were  not  long 
in  showing  themselves. 

Development  of  Governmental  Contributions.  The  i  per 
cent  contribution  which  already  proved  inadequate  in  the  ex- 
perience of  mutual  aid  associations,  was  also  bound  to  prove 
inadequate  in  the  retirement  funds.  In  Cincinnati  this  be- 
came clear  within  two  years  after  the  establishment  of  the 
fund;  in  other  cities  a  longer  period  elapsed  but  the  conclu- 
sion was  equally  plain.  Unless  the  rate  of  teachers'  contribu- 
tions were  increased  or  another  source  of  income  provided, 
these  funds  could  not  continue  to  provide  the  promised  bene- 
fits for  any  considerable  length  of  time.  In  most  cases  the 
attempt  was  naturally  made  to  secure  aid  from  the  govern- 
ment. 

The  fact  that  retirement  funds  for  teachers  existed  by  legis- 
lative authority  and  were  to  some  extent  a  governmental 
function,  was  now  more  or  less  firmly  established  in  the  minds 
of  government  officials  and  legislators.  The  wise  action  of 
the  teachers  in  giving  the  government  officials  the  adminis- 
tration and  custody  of  the  funds  had  resulted  in  the  govern- 
ment becoming  in  a  sense  responsible  for  the  sufficiency  of 
the  funds.  These  facts  paved  the  way  for  the  next  logical 
step — that  of  securing  legislation  which  would  make  the  city 
contribute  to  the  retirement  funds. 

Here  again  the  movement  took  the  path  of  least  resistance. 
The  leaders  of  the  teachers  did  not  ask  for  a  direct  contribu- 
tion from  the  city  budget,  because  this  would  have  raised  an 
undesirable  discussion  and  perhaps  an  opposition  on  the  part 
of  the  teachers.  They  looked  for  some  special  source  of  in- 
come which  was  lying  idle  or  was  used  for  miscellaneous 

23 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

contingencies  and  could  be  quietly  diverted  to  the  teachers' 
retirement  fund. 

This  may  be  illustrated  by  the  case  of  New  York  City. 
When  it  began  to  be  realized,  in  1896,  that  in  a  year  or  two 
the  income  of  the  fund,  which  was  derived  wholly  from  ab- 
sence deductions,  would  be  insufficient,  the  leaders  of  the 
movement  concentrated  their  efforts  upon  securing  a  portion 
of  the  excise  taxes.  Their  efforts  were  strengthened  by  two 
arguments :  in  the  first  place,  the  police  pension  fund  had  al- 
ready enjoyed  for  many  years  a  portion  of  these  taxes  and 
there  was  no  reason  why  the  teachers'  retirement  fund  should 
not  also  partake  therefrom;  in  the  second  place,  the  idea  of 
using  money  thus  derived  would  find  favor  in  the  eyes  of  the 
public.  The  bill  which  they  framed  provided  for  a  gov- 
ernmental contribution  of  5  per  cent  of  excise  taxes,  and  they 
secured  its  passage  without  considerable  opposition.  Simi- 
larly, in  Chicago,  when  the  fund  was  found  in  the  years 
1901-07  to  be  on  the  point  of  wreckage,  the  attempt  was  made, 
with  eventual  success,  to  have  the  interest  on  the  school  funds 
turned  over  to  the  pension  fund. 

The  success  of  the  teachers  in  getting  the  government  to 
make  in  some  form  or  other  a  contribution  to  their  retire- 
ment fund  led  to  further  movements  in  the  same  direction.  As 
the  disbursements  increased  and  insufficiencies  of  income 
threatened  their  funds,  they  faced  the  problem  of  either  in- 
creasing their  own  contributions  or  else  securing  an  increase 
of  the  government's  contribution.  Naturally  the  teachers  pre- 
ferred the  latter  alternative. 

Under  these  conditions  less  and  less  emphasis  was  placed  on 
the  old  idea  that  the  teacher  benefits  by  contributing  to  a  re- 
tirement fund,  and  more  and  more  on  the  newer  idea  that  the 
school  system  receives  the  chief  benefit.  In  trying  to  obtain 
an  increase  of  the  government's  contribution  the  leaders  of 
the  movement  stressed  the  argument  that  efficiency  of  serv- 
ice is  secured  by  the  operation  of  a  retirement  fund  and  that 

24 


EVOLUTION  OF  TEACHERS"  PENSIONS 

the  primary  obligation  to  support  the  fund  rests,  therefore, 
upon  the  government. 

As  a  result,  the  governmental  contribution,  originally  in- 
voked purely  as  a  relief  measure,  came  more  and  more  to  be 
regarded  as  properly  the  principal  if  not  the  sole  source  of 
income  for  the  pension  funds.  In  virtually  all  the  funds  the 
tendency  was  for  the  governmental  contribution  steadily  to 
rise,  while  the  teachers'  contribution  remained  stationary  or 
even  diminished.  The  tendency  is  well  illustrated  by  the  expe- 
rience of  Chicago. 

Up  to  1907  the  teachers  were  the  only  contributors  to  the 
Chicago  fund.  In  1907  and  1909  their  leaders  succeeded  in 
obtaining  a  city  contribution  in  the  form  of  interest  on  school 
funds.  Two  years  later  they  secured  a  city  contribution 
equal  to  that  of  the  teachers.  They  urged  that  the  teachers 
had  been  "generous  beyond  their  means,"  and  that  it  was 
impossible  for  them  to  set  aside  from  their  salaries  more  than 
they  had  been  contributing.  Hardly  three  years  passed  after 
this  increase  of  the  city's  contribution  when  the  teachers 
secured  still  further  legislation  making  it  possible  for  the  city 
to  contribute  twice  as  much  as  they  themselves  did. 

A  similar  process  took  place  in  Brooklyn  and  New  York. 
To  the  Brooklyn  fund,  established  in  1895,  the  teachers  con- 
tributed i  per  cent  of  their  salary.  Next  they  got  the  city  to 
contribute  to  their  fund  a  portion  of  the  excise  taxes  and  (at 
the  time  of  the  consolidation  of  the  Brooklyn  with  the  New 
York  City  fund)  the  absence  deductions.  Believing  that  these 
two  sources  of  income  would  be  sufficient  and  that  it  would 
not  be  necessary  for  them  to  contribute  anything,  they  secured 
at  the  same  time  the  abolition  of  their  own  contributions. 
This  resulted  in  a  rapid  decrease  during  the  next  three  years 
of  the  excess  income  of  the  fund,  a  decrease  which  in  1905 
threatened  the  fund  with  disaster.  Realizing  that  they  could 
not  obtain  at  that  time  a  further  increase  of  the  government's 
contribution,  the  leaders  of  the  teachers  were  compelled  to 

25 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

obtain  the  restoration  of  a  provision  for  contributions  from  the 
teachers.  Ten  years  later  the  increasing  disbursements  of  the 
fund  exceeded  its  receipts,  and  it  became  apparent  that  the 
rate  of  contributions  was  inadequate  and  would  have  to  be 
increased,  but  so  strong  an  opposition  was  shown  by  the  teach- 
ers to  any  increase  of  their  contributions  that  the  unsound 
condition  of  the  fund  was  permitted  to  continue. 

The  atrophy,  in  the  minds  of  the  teachers,  of  the  principles 
of  self-help  and  mutual  aid  may  be  attributed  in  large  meas- 
ure to  two  special  conditions — the  forfeiture  of  contributions 
at  resignation  and  dismissal  (the  tontine  feature)  which  made 
the  young  teachers  lose  interest  in  the  fund,  and  the  entirely 
compulsory  and  automatic  way  in  which  their  contributions 
were  exacted  of  them. 

The  growing  idea  that  the  sole  purpose  of  establishing  a 
retirement  system  is  to  secure  efficiency  of  service  and  that 
the  government  should,  therefore,  bear  the  entire  expense 
thus  found  favor  in  a  number  of  cities  and  states  in  which 
the  establishment  of  a  retirement  system  was  contemplated. 
Between  the  years  1894  and  1917,  no  less  than  six  cities  and 
five  states  adopted  teachers'  pension  systems  founded  upon 
this  principle.  During  the  same  years  there  were  set  up  in 
sixty-four  cities  and  fourteen  states,  systems  which  provided 
for  joint  contributions  by  the  government  and  the  teachers. 

Unsoundness  of  Funds  Demonstrated.  The  government 
subsidies  obtained  by  the  unsound  contributory  funds  en- 
abled them  to  continue  for  a  number  of  years.  But  in  the 
fixing  of  those  subsidies  the  teachings  of  actuarial  science 
were  as  a  rule  no  more  regarded  than  they  had  been  in  con- 
nection with  the  fixing  of  the  teachers'  contributions.  Sooner 
or  later  the  unsoundness  of  the  funds  and  the  impossibility 
of  continuing  them  on  the  existing  basis  became  apparent. 

The  Chicago  fund  was  one  of  the  'first  to  become  insolvent. 
This  happened  in  the  year  1900.  In  response  to  the  demand 
of  a  convention  of  contributors,  the  board  of  trustees  employed 

26 


EVOLUTION  OF  TEACHERS'  PENSIONS 

an  actuary  to  examine  the  condition  of  the  fund.  The  actuary 
reported  that  "in  no  ordinary  case  would  the  contribution  of 
i  per  cent  of  salary  provide  an  annuity  much  if  at  all  exceed- 
ing $50  per  annum," — yet  the  fund  had  been  paying  annuities 
between  $400  and  $600.  The  actuary  suggested  a  fundamen- 
tal reorganization  of  the  fund  under  which  the  contri- 
butions and  annuities  should  vary  according  to  age  of  the 
contributor.  This  advice  however  was  not  heeded.  Instead 
the  attempt  was  made  to  secure  a  contribution  from  the  city. 
They  seemed  to  think  that  the  fund  though  actuarially  un- 
sound could  operate  for  many  more  years  if  the  vast  resources 
of  the  city  would  support  it.  Thus  the  report  of  the  actuary 
was  forgotten  and  the  actuarial  reorganization  of  the  fund 
postponed. 

In  New  York  City  the  fund  operated  for  fifteen  years  with- 
out much  doubt  being  raised  as  to  its  financial  soundness. 
There,  too,  the  confidence  in  the  city's  support  overshadowed 
in  the  minds  of  the  teachers  any  uneasiness  as  to  the  adequacy 
of  their  fund.  Not  until  the  disbursements  exceeded  the  re- 
ceipts in  the  year  1911  did  the  managers  engage  an  actuary. 
But  they  did  not  adopt  his  recommendations  as  to  putting  the 
fund  on  an  actuarial  basis  and  increasing  the  contributions  to 
an  adequate  rate  because  they  knew  that  higher  contributions 
would  be  solidly  opposed  by  the  teaching  body.  Instead,  vari- 
ous makeshifts  were  proposed  by  the  managers  of  the  fund 
but  were  not,  however,  adopted  by  the  city  authorities,  who 
were  at  that  time  already  advised  that  the  fund  was  inherently 
insolvent  and  would  have  to  be  liquidated  and  replaced  by  an 
altogether  different  system. 

Even  where  it  is  appreciated  that  the  fund  is  not  on  an  alto- 
gether sound  basis,  seldom  is  the  extent  of  the  liabilities  in- 
curred as  a  result  of  such  unsound  operation  adequately  recog- 
nized. Thus,  in  the  case  of  the  old  New  York  City  fund, 
though  the  inadequacy  of  the  fund  had  frequently  been  alleged, 

27 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

it  required  an  actuarial  investigation1  to  demonstrate  that  the 
liabilities  incurred  by  the  fund  had  exceeded  its  assets  by  the 
staggering  total  of  over  $54,000,000.  The  balance  sheet  of 
the  fund,  as  developed  by  this  investigation,  and  some  of  the 
comments  of  the  city's  commission  on  pensions  on  the  facts 
disclosed  are  worthy  of  reproduction.2 

BALANCE  SHEET 

OLD  NEW  YORK  CITY  TEACHERS'  RETIREMENT  FUND 
June  30,  I9M 

LIABILITIES 

Value  of  1,521  pensions  already  granted; $11,581,210 

Value  of  prospective  pensions  to  teachers  now  in  service 58,228,550 

Total    $69,809,760 

ASSETS 

Funds  in  hand $882,715 

Value  of  future  i  per  cent  salary  contributions  of  teachers 

now  in  service 4>I83,725 

Value  of  future  city  contributions  of  unexcused  absence  de- 
ductions and  5  per  cent  of  excise  taxes  which  can  be 
credited  to  teachers  now  in  service 10,000,000 

DEFICIENCY,  UNPROVIDED  FOR 54,743,320 

Total    $69,809,760 


The  liabilities  of  the  fund  show  the  discounted,  or  "present,"  value 
of  future  pension  payments.  In  explanation,  the  total  liability  of  the 
fund  shown  in  the  balance  sheet  in  the  sum  of  $69,809,760  represents  the 
capital  amount  which,  if  invested  on  June  30,  1914,  will  be  just  sufficient, 
together  with  future  interest  accumulations  at  4  per  cent,  compounded 
annually,  to  make  future  pension  payments  to  teachers  already  retired 
and  to  those  teachers  in  active  service  on  that  date  who  subsequently 
retire.  *  *  * 

The  total  of  the  assets — $15,066,440 — is  inadequate  to  equal  the  total 
liabilities  of  $69,809,760  by  $54,743,320.  The  amount  of  this  deficiency 
represents  the  capital,  or  reserve,  which  should  have  been  on  hand  in 
the  fund  in  addition  to  the  $882,715  on  June  30,  1914,  to  make  the  fund 

'In  an  actuarial  investigation  of  a  fund,  the  actuary  first  ascertains 
the  amount  of  future  payments  of  the  fund  to  all  its  present  pensioners 
and  active  members  until  the  death  of  the  last  present  member,  and  the 
amount  of  contributions  which  the  fund  is  expected  to  receive  on  account 
of  its  present  members.  Both  these  amounts,  the  liabilities  and  the  assets 
respectively,  are  then  discoumted  back  to  the  date  of  valuation  and  the 
amount  of  the  deficiency  is  obtained  by  subtracting  the  latter  from  the 
former.  For  further  discussion  of  actuarial  processes,  see  pages  101 
and  102. 

"New  York  (City)  Commission  on  Pensions,  Report  on  the  Teachers' 
Retirement  Fund  (1915),  p.  30  ff. 

28 


EVOLUTION  OF  TEACHERS'  PENSIONS 

solvent.  It  would  have  enabled  the  fund,  together  with  future  accumula- 
tions of  4  per  cent  compound  interest,  to  supplement  its  inadequate  future 
income. 

The  large  amount  of  shortage— $54,743,320— which  is  a  direct  result 
of  the  fund's  insufficient  income  during  the  21  years  of  its  past  operation, 
does  not  give,  however,  an  adequate  idea  of  the  seriousness  of  the  situa- 
tion. It  merely  represents  the  deficiency  as  it  existed  on  June  30,  1914. 
The  fund's  reorganization  is  made  more  difficult  as  time  passes,  since 
under  the  present  method  of  operation  it  merely  serves  as  a  means  of 
developing  a  constantly  increasing  deficit. 

The  rapid  increase  in  the  deficiency,  due  to  the  absence  of  the  reserve 
°f  $54,743>32°,  may  be  easily  appreciated  when  it  is  considered  that  simple 
interest  alone  at  4  per  cent  of  the  above  amount  would  have  yielded  to 
the  fund  $2,189,733  for  the  year  ending  June  30,  1915,  The  lack  of  in- 
terest accumulations  therefore  increased  the  deficiency  during  one  year 
to  $56,933fl53. 

A  parallel  condition  could  be  demonstrated  for  virtually  all 
the  pension  funds  of  this  country  except  those  few  which  have 
recently  been  reorganized  on  an  actuarial  basis — Massachu- 
setts, New  York  City,  Pennsylvania  and  Connecticut.  They 
are  insolvent  in  so  far  as  they  have  failed  to  provide  for  ade- 
quate reserves  with  which  to  meet  accrued  liabilities  as  well 
as  liabilities  incurred  through  services  rendered  since  the 
establishment  of  the  system.  It  matters  not  that  most  of  these 
systems  are  still  able  to  make  payments,  still  have  unexpended 
cash  on  hand,  and  are  and  will  for  a  few  years  continue  to  be 
able  to  meet  their  payments.  They  are  no  less  insolvent  than 
the  systems  which  are  already  bankrupt.  Only  by  shifting 
their  huge  deficiencies  ahead  year  by  year  do  they  continue 
their  existence.  By  doing  so  they  increase  of  course  these 
deficiencies  because  of  the  continued  failure  to  discount  future 
liabilities.  The  longer  they  operate,  therefore,  the  greater 
are  the  deficiencies  and  the  more  insolvent  the  funds  become. 

Present  Extent  of  Teachers'  Pension  Systems.  The 
establishment,  in  the  years  1894-1897,  of  the  nine  pioneer  sys- 
tems has  been  treated  in  a  preceding  section.  In  1898 
retirement  systems  were  established  in  Charleston  and  New- 
port, so  that  by  the  close  of  the  century  there  were  in  exist- 
ence eleven  systems,  but  one  of  which  was  state-wide,  while 
the  others  applied  in  every  case  to  large  cities  only. 

29 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  next  decade  witnessed  a  steady  development  of  the 
teachers'  pension  movement.  Three  state  and  twenty-eight 
local  systems  were  established,  so  that  in  1910  there  was  a 
total  of  four  state  and  thirty-eight  local  systems  in  operation. 

Jt  is  within  the  present  decade,  however,  that  the  move- 
ment has  attained  its  fullest  development.  Since  1910  it  has 
gathered  increasing  momentum  with  each  succeeding  year. 
Two  large  state-wide  systems,  those  of  New  York  and  Wis- 
consin, as  well  as  nine  local  systems,  began  operations  in 
1911.  The  state  system  of  Arizona  and  six  local  pension 
funds  were  added  in  1912.  The  greatest  activity,  however, 
took  place  in  1913,  1914  and  1915.  During  these  years,  no 
less  than  thirteen  state-wide  and  eighteen  local  systems  were 
created,  directly  affecting  about  127,000  teachers.  With  the 
latest  addition  to  the  list  in  May,  1916,  of  the  Erie  Teachers' 
Pension  Fund,  and  in  1917  of  the  Pennsylvania  and  Con- 
necticut funds,  there  were  twenty-two  state  and  seventy-two 
local  pension  systems  in  operation  affecting  approximately 
332,554  teachers 

The  table  on  the  page  opposite  shows  for  each  year,  from 
1894  to  1916  inclusive,  the  several  systems  established. 

Growth  of  State-Wide  Systems.1  Of  the  thirty-two  states 
in  which  teachers'  pension  systems  of  whatever  kind  now 
exist,  twenty-two  have  state-wide  systems.2  In  these  twenty- 
two  state-wide  systems  are  embraced  nearly  four-fifths  of  all 
the  teachers  covered  by  pension  systems  in  this  country.3  Yet 

aThe  term  "state-wide"  does  not  necessarily  mean  that  all  the  teachers 
of  the  state  are  members  of  the  system.  In  case  membership  is  voluntary, 
it  simply  means  that  it  is  open  to  the  teachers  from  any  part  of  the  state. 

2In  thirteen  of  these  twenty-two  states,  local  systems,  totaling  forty- 
two  in  number,  are  still  in  existence  as  a  result  of  earlier  legislation. 

*The  distribution  of  teachers  under  state  and  local  systems  in  1917 
was  as  follows : 

No.  of 
Systems  No.  of  Systems          Teachers  Covered 

State  systems  22  249,380 

Local  systems : 

In  states  having  state  systems  also..  42  66,604 

In  states  having  no  state  systems ...  30  16,570 

94  332,554 

30 


EVOLUTION  OF  TEACHERS'  PENSIONS 


LOCAL  PENSION  SYSTEMS 

! 

New  York  City 
Detroit,  Mich. 
Chicago,  111.;  Buffalo,  N.  Y. 
San  Francisco,  Cat.;  Cincinnati,  O.;  Providence,  R.  I.;  Syracuse, 
N.  Y. 
Charleston,  S.  C.;  Newport,  R.  I. 
Boston,  Mass. 

Youngstown,  O. 
Cleveland,  O.;  Rochester  and  Troy,  N.  Y. 
Philadelphia,  Pa.;  Indianapolis,  Ind.;  Milwaukee,  Wis.;  Spring- 
field, O. 
Albany,  Yonkers  and  Cohoes,  N.  Y.;  Hamilton  O.;  Harrisburg, 
Pa.;  Brookline,  Mass. 
Baltimore,  Md.;  Minneapolis  and  St.  Paul,  Minn.;  Denver,  Colo.; 
Salt  Lake  City,  Utah;  Columbus,  O.;  Omaha,  Neb.;  Westchester 
County,  N.  Y. 
New  Orleans,  La.;  Atlanta,  Ga.;  Toledo,  O.;  Wilkes  Barre,  Pa  ; 
Sandusky,  P. 
Dayton  and  Tiffin,  O.;  New  Haven  and  New  London,  Conn.; 
Scranton,  Pa.;  Wilmington,  Del.;  Topeka,  Kan.;  Duluth,  Minn.; 
Peoria,  111. 
Pittsburgh,  Pa.;  Portland,  Ore.;  Louisville,  Ky.;  Baltimore  County 
and  Allegheny  County,  Md.;  Norwood,  P. 
Terre  Haute,  Ind.;  Reading,  Aitoona  and  Chester,  Pa.;  Bellefon- 
taine,  Canton,  Chillicothe,  Norwalk,  Piqua,  O.;  Columbus,  Ga.; 
Mt.  Vernon,  N.  Y. 
South  Bend,  Ind.,  Fremont,  Lakewood,  Massillon,  Zanesville,  O.; 
Bristol,  R.  I.;  Lancaster,  Pa. 

£ 

oj 
a 

ed  as  in.  et;ste  ice  in  Iv»l7  and  excludes  iivansville  in  Indiana  and  eight  local  systems  in  New 
iring  the  years  1911-1916. 

Number 

iH  t-<  C*3  ^       W  *~*     •'HCO^'      SO       00            IT 

*         *     X         *             "I 

R 

STATE  PENSION  SYSTEMS 

+-» 

2 

X 

1- 

ana,  Minnesota, 
shire,  Nevada 

5 

'.  <U     '.          '.'.£'.       J3       £ 

i. 

New  York,  Wisconsin  . 
Arizona.  .  . 

Massachusetts,  Califor 
kota,  Maine,  Vermont 

Illinois,  Michigan,  Indi 
Montana,  New  Hamp 

Pennsylvania,  Connect 

•The  table  includes  only  those  funds  char  were  repor 
York  which  had  been  absorbed  by  state  pension  funds  d 

.Z    .        .    .«    .     K     > 

Number 

(N            ^H       to 

N 

„ 

s 

U           tf\ 

"c3  J-5     ^ 

IFI 

Z      C/3 

—  -  -  —  «»  -  -    -a    -  s    * 

t--     .-IN 

• 

u^g 

^°(2| 

1111  I8S11S  § 

i 

c 

t-t            N 

M            -0- 

in     iot~ 

01 

0)           01 

O>           O) 

05       005 

t 

TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

these  state-wide  systems  are  of  comparatively  recent  origin. 
The  tendency  toward  such  systems  is  an  important  develop- 
ment in  the  teachers'  pension  problem  and  indicates  that  the 
pensioning  of  teachers  employed  by  small  communities  is 
more  and  more  recognized  as  a  state  function. 

The  assembling  of  teachers  in  large  groups  for  retirement 
purposes  permits  a  wider  uniformity  in  the  application  of 
principles  and  facilitates  desirable  shifting  of  teachers  within 
a  .state  without  the  complications  brought  about  by  forfeitures 
of  pension  rights.  The  larger  systems  have  the  added  advan- 
tage of  permitting  scientific  management  and  consequently  of 
securing  financial  stability.  Large  numbers  give  scope  for 
the  operation  of  the  law  of  probabilities  affecting  deaths,  re- 
tirements, resignations  and  other  factors,  on  the  correct  inter- 
pretation of  which  the  solvency  of  a  pension  system  neces- 
sarily depends. 

The  separate  unrelated  existence  of  small  pension  funds1 
will  inevitably  be  discontinued  if  the  present  development  of 
state  pension  systems  progresses.  A  foreshadowing  of  this 
probability  is  found  in  the  teachers'  retirement  plan  of  the 
state  of  New  York,  which  offers  to  local  systems  the  option 
to  be  absorbed  by  the  state  fund  upon  a  petition  signed  by 
two-thirds  of  their  members.  By  the  close  of  1915,  nine  of 
the  seventeen  local  pension  systems  in  the  state  of  New  York 
had  availed  themselves  of  this  opportunity,2  and  the  teachers 
of  other  localities  contemplate  similar  action.  Another  prec- 
edent of  this  kind  is  furnished  by  the  state  of  Indiana  which, 
for  the  purpose  of  bringing  its  teachers  into  the  state-wide 
pension  system  established  in  1915,  is  subdivided  into  148 
units.3  Each  unit — including  those  of  Indianapolis,  Terre 
Haute,  Evansville  and  South  Bend,  which  had  previously 

'Of  72  local  systems,  34  have  a  membership  of  less  than  500  teachers 
each,  20  systems  a  membership  of  less  than  250,  and  7  have  a  membership 
of  less  than  100. 

2They  are  enumerated  in  table  on  p.  180. 

*Q2  counties,  51  cities  with  more  than  5,000  population,  and  6  state 
institutions. 

32 


EVOLUTION  OF  TEACHERS'  PENSIONS 

established  local  pension  funds — may  join  the  state  system 
upon  a  majority  vote  of  its  local  authorities  and  teachers. 
During  the  year  following  the  enactment  of  this  law,  thirty 
units,  including  Evansville,  were  absorbed  by  the  state  system, 
and  since  that  time  undoubtedly  many  more  have  been  in- 
cluded. The  system  of  Massachusetts,  which  was  established 
in  1913,  took  in  the  fourteen  local  systems  which  had  been 
founded  under  the  permissive  act  of  1908.  The  new  system 
of  Pennsylvania,  which  covers  all  the  teachers  in  the  state 
not  hitherto  provided  for,  allows  the  local  systems  which 
had  been  previously  established  to  join  the  state  system  and 
become  subject  to  its  provisions  if  two-thirds  of  their  mem- 
bers favor  a  merger.  It  is  probable  that  the  majority  of  the 
ten  local  systems  will  adopt  the  new  law  and  merge  with  the 
state  system. 

The  tendency  toward  uniformity  and  consolidation  is  not 
so  apparent,  however,  in  the  case  of  the  larger  cities.  The 
city  of  New  York  recently  reorganized  its  old  system  on  a 
sound  actuarial  foundation,  instead  of  availing  itself  of  the 
privileges  of  joining  the  state  system  which  has  not  been  as 
yet  reorganized  on  a  sound  basis.  The  city  of  Philadelphia 
is  now  engaged  in  the  work  of  reorganizing  its  old  retirement 
system.  It  is  considering  a  proposition  by  which  it  will  not 
only  accept  provisions  of  the  state  systems  but  also  provide  for 
its  teachers  certain  additional  benefits  and  introduce  certain 
novel  features. 

It  is  possible  that  the  future  tendency  in  the  field  of  teachers' 
pensions  will  be  more  or  less  similar  to  the  present  tendency 
in  the  field  of  education,  in  which  the  state  tends  to  maintain 
certain  minimum  uniform  standards,  at  the  same  time  allow- 
ing local  units  to  introduce  higher  standards  in  their  schools. 
In  a  similar  manner  the  state-wide  pension  systems  will  per- 
haps maintain  certain  minimum  uniform  pension  benefits  and 
administer  them  to  the  better  advantage  of  all  the  teachers 
and  all  the  schools  in  the  state,  at  the  same  time  allowing 

33 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  local  units  to  provide  for  their  teachers,  on  a  sound  act- 
uarial basis,  additional  benefits  and  introduce  such  improve- 
ments as  they  may  deem  necessary.  Greater  progress  may 
perhaps  be  achieved  this  way.  After  the  various  improve- 
ments and  experiments  have  been  locally  tested,  those  which 
have  been  found  most  sound  can  be  adopted  as  state-wide 
measures.  Thus,  the  state  systems  and  the  local  systems  can 
stimulate  each  other  toward  greater  progress. 

Conclusion:  Present  Tendencies  and  Forces.  The  pres- 
ent is  a  period  of  readjustment.  Not  only  is  the  appreciation 
becoming  more  general  that  nearly  all  of  the  existing  systems 
are  financially  unsound  and  must  be  radically  reorganized  if 
they  are  to  continue  in  operation,  but  a  truer  estimate  is 
being  formed,  not  only  by  the  teachers  themselves,  but  by 
legislatures  and  state  and  local  officials  and  the  public  gen- 
erally, of  the  significance  of  the  teachers'  pension  movement. 
The  principles  discussed  in  the  succeeding  chapters  of  this 
volume  do  not  need  to  be  here  rehearsed,  but  it  may  be  said 
that  a  broadening  recognition  of  them  is  operating  through- 
out the  United  States  as  a  force  tending  to  bring  about  a 
proper  relation  between  the  interests  of  the  teachers,  of  the 
government  service  in  which  they  are  employed,  and  of  the 
public  of  which  they  constitute  an  important  group.  This  is 
reflected  not  only  in  the  character  of  benefits  supplied  and 
the  terms  upon  which  they  are  granted,  but  in  the  forms  of 
management  and  control  and  the  proper  balancing  of  indi- 
vidual assessments  or  contributions  and  the  grants  from  the 
public  purse. 


34 


CHAPTER  II 
THE  TEACHERS'  PENSION  PROBLEM  OUTLINED 

In  the  preceding  chapter  the  trend  of  the  development  of 
teachers'  pension  systems  from  a  condition  of  financial  un- 
soundness  to  one  of  'actuarial  correctness  was  pointed  out. 
In  the  present  chapter  the  chief  problems,  actuarial  and  social, 
involved  in  the  establishment  of  a  sound  system  will  be 
defined,  and  the  way  prepared  for  the  critical  and  detailed 
discussion  of  those  problems  in  the  chapters  which  follow. 
These  problems  relate  to  the  proper  financing  of  the  proj- 
ects; to  the  character  of  the  benefits  to  be  supplied;  to  the 
groups  of  persons  to  be  included;  to  the  distribution  of 
costs,  whether  as  between  the  teachers  and  the  government 
or  between  the  different  classes  of  teachers;  to  the  question 
whether  participation  should  be  optional  or  obligatory;  and 
to  the  hands  in  which  the  management  and  control  of  the 
systems  should  be  vested. 

Fundamental  to  the  proper  solution  of  all  these  questions 
is  a  clear  recognition  of  what  may  be  termed  the  actuarial 
basis  of  all  pension  systems.  A  satisfactory  retirement 
system  involves  a  promise  to  each  person  of  the  branch  of 
service  to  which  it  is  applied.  The  terms  of  the  promise  usu- 
ally vary  according  to  the  member's  age,  length  of  service,  and 
salary  received,  not  to  speak  of  other  special  considerations 
which  may  be  present.  The  annual  and  total  amounts  of  the 
pension  payments  and  the  conditions  under  which  they  may  be 
demanded  are  determined  by  varying  factors,  the  force  of 
which  cannot  in  all  cases  be  exactly  predetermined,  but  must 
be  estimated  upon  the  basis  of  averages.  And,  even  starting 

35 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

from  this  basis,  the  mathematical  calculations  involved  are  such 
as  only  skilled  actuaries  are  qualified  to  make. 

It  is  of  course  impossible  to  determine  who  or  how  many 
of  the  members  embraced  within  the  operation  of  any  given 
pension  system  will  withdraw  from  the  service  without  ask- 
ing for  or  being  entitled  to  a  pension,  or,  having  been 
awarded  pensions,  how  long  the  recipients  will  continue 
to  live  and  draw  them.  However,  it  is  possible,  upon  the 
basis  of  approved  mortality  and  actuarial  tables,  to  determine 
with  substantial  exactness  how  many  of  a  considerable  num- 
ber of  persons  will  qualify  for  an  annuity,  how  many  will 
die  or  resign  or  be  dismissed  under  circumstances  which 
will  disqualify  them  from  receiving  a  pension,  and  how 
many  years  those  who  are  awarded  pensions  may  be  expected 
to  live.  Each  person  to  whom  the  pension  system  applies 
represents  a  certain  liability  which,  under  the  law  of  averages, 
can  be  determined,  and,  therefore,  provision  must  be  made 
for  meeting  it  when  it  accrues,  whether  by  the  recipient's 
own  periodical  contributions  or  by  proportionate  grants  from 
the  state.  Thus,  it  is  necessary,  in  effect,  if  not  in  actual 
bookkeeping  form,  that  both  a  debit  and  a  credit  account 
should  be  opened  for  each  prospective  annuitant,  which  ac- 
counts should  be  made  to  balance.  In  the  "reserve,"  thus 
accumulated,  lies  the  guarantee  to  a  system's  members  that 
the  promises  made  to  them  will  be  kept  twenty,  thirty  or 
perhaps  sixty  or  seventy  years  later. 

Under  those  systems  which  provide  for  contributions  from 
the  public  purse,  the  extent  of  the  liabilities  assumed  by  the 
government  at  the  time  of  the  establishment  of  the  system 
does  not  become  fully  manifest,  or  at  any  rate  the  amounts 
that  must  be  annually  paid  do  not  reach  their  permanent 
level  until  sixty  or  seventy  years  later;  for  it  is  not  until 
then  that  the  total  number  of  pensioners  reaches  the  level 
at  which  deaths  may  be  expected  to  equal  the  new  acces- 
sions of  each  year.  Thus,  when  a  government  gives  its 

36 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

support  to  a  newly  established  retirement  system,  it 
is  necessary  that  it  should  foresee  and  make  provision 
for  meeting  the  liabilities  that  will  accrue  a  generation  later,  in 
much  the  same  way  that  when  it  creates  a  bonded  indebted- 
ness it  is  necessary  to  make  provision  for  the  time  when 
the  bonds  will  mature  and  become  payable. 

Groups  of  Persons  to  be  Included.  The  personnel  of  a 
school  system  consists  of  various  groups  of  employees:  super- 
intendents, supervisors,  principals,  rank  and  file  teachers,  teach- 
er-clerks, janitors,  and  laborers.  When  the  establishment  of  a 
pension  system  in  a  particular  school  system  is  considered,  the 
question  arises  :  Shall  it  apply  to  teachers  or  shall  it  also  allow 
other  groups  to  come  in  ?  Opinions  may  differ  on  this  question. 

The  teachers  may  take  the  stand  that  the  state  or  the  city 
need  not  assist  the  fortunate  ones  who  receive  higher  wages 
and  who  might,  therefore,  take  care  of  themselves,  but  should 
increase  its  generosity  to  the  lower  paid.  They  may  also  claim 
that  they  deserve  a  pension  system  because  of  the  intellectual 
character  of  the  work  they  perform,  and  that  the  school  em- 
ployees who  perform  inferior  work  do  not  deserve  to  be  in- 
cluded. 

Others,  and  especially  the  school  authorities,  may  take 
a  different  view.  They  may  argue  that  the  higher  paid 
employees  are  no  less  improvident  than  the  lower  paid  and 
are  in  no  less  need  of  protection,  and,  on  the  other  hand 
that  the  duties  performed  by  the  lower  classes  of  school  em- 
ployees are  public  duties  as  well  and  that  the  efficiency  of 
the  schools  may  be  considerably  affected  if  these  employees 
are  not  covered  by  the  pension  system,  with  the  result  that  dead 
wood  is  allowed  to  accumulate  among  them. 

The  question  whether  or  not  a  particular  class  of  school  em- 
ployees should  be  included  in  a  pension  system  cannot  be  settled 
by  a  mere  comparison  of  their  duties  and  salaries  with  those 
of  the  rank  and  file  teachers.  It  must  be  settled  on  grounds 
of  principle  and  expediency.  The  same  principle  applies 

37 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

to  all  classes  of  employees — it  is  their  protection  on  one 
hand,  and  efficiency  of  service  on  the  other.  The  questions 
thus  arise:  Is  it  desirable  from  the  points  of  view  of  the 
employees,  of  the  employer  and  of  the  public,  that  a  pension 
system  protecting  the  particular  class  of  employees  be  estab- 
lished? Is  it  desirable  from  the  point  of  view  of  efficiency 
that  a  system  eliminating  dead  wood  be  introduced  in  the 
particular  service?  Is  the  establishment  of  such  a  system 
under  certain  circumstances  and  at  that  particular  time  ex- 
pedient and  practicable? 

In  the  development  of  pension  legislation  the  tendency 
has  been  towards  a  steady  extension  of  the  pension  system 
to  all  classes  of  the  school  personnel.  This  tendency  may 
be  illustrated  by  the  histories  of  the  New  Jersey  and  New 
York  City  Teachers'  Retirement  Funds. 

The  New  Jersey  fund  was  established  in  1896  and  was 
to  apply  to  "teachers  in  public  schools."  Three  years  later 
an  amendment  of  the  law  was  enacted  which  interpreted 
this  term  as  meaning — 

Teachers,  principals  and  supervising  principals  in  public 
schools  or  in  any  reformatory  or  normal  school  or  in  any 
school  supported  either  wholly  or  partially  by  public  moneys 
raised  under  the  authority  of  any  law  of  this  state. 

The  amendment  of  1902  included  superintendents  among 
the  beneficiaries  of  the  fund,  and  the  amendment  of  1906 
further  broadened  the  application  of  the  system  by  including 
under  the  term  "teachers"  all  city,  county  or  state  superin- 
tendents, and  also  teacher-clerks  and  supervisors. 

The  broadening  of  the  scope  of  the  New  York  City  fund  was 
similar  to  that  of  the  New  Jersey  fund.  After  the  fund  was 
established  in  1894,  the  amendments  of  1902,  1905,  and  other 
amendments  have  brought  under  the  system  various  classes 
of  teachers  and  administrative  officers  who  had  not  before 
been  provided  for,  until  at  the  present  time  the  list  of  bene- 
ficiaries included  under  the  term  "teachers"  is  exceedingly 
long  as  may  be  seen  from  the  following: 

38 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

Teacher'  shall  mean  the  city  superintendent  of  schools, 
the  associate  city  superintendents,  the  district  superintend- 
ents, the  director  and  the  assistant  director  of  the  division 
of  reference  and  research,  the  director  and  the  assistant 
directors  of  the  bureau  of  compulsory  education,  school 
census  and  child  welfare,  the  members  of  the  board  of  ex- 
aminers, the  directors  and  the  assistant  directors  of  special 
branches,  the  supervisor  and  the  assistant  supervisors  of 
lectures,  all  principals,  vice-principals,  assistants-to-principals, 
heads  of  departments,  and  all  regular  and  special  teachers 
of  the  public  day  schools  of  the  city  of  New  York,  and  all 
employees  of  the  board  of  education  appointed  to  regular 
positions  in  the  services  of  the  public  schools  at  annual 
salaries  and  whose  appointments  were  made  or  shall  here- 
after be  made  from  eligible  lists  prepared  as  the  result  of 
examinations  held  by  the  board  of  examiners  of  the  depart- 
ment of  education.1 

The  new  system  of  the  state  of  Pennsylvania  has  gone 
still  further  along  this  line.  It  was  originally  devised  to 
include  only  teachers.  As  other  school  employees  demanded 
to  be  included  in  the  system,  the  bill  was  amended  so  as 
to  include — 

any  clerk,  stenographer,  janitor,  attendance  officer,  or  other 
person  engaged  in  any  work  concerning  or  relating  to  the 
public  schools  of  this  commonwealth. 

At  the  same  time  the  name  of  the  system  was  changed  from 
a  Teachers'  Retirement  System  to  a  Public  School  Employees 
Retirement  System.  In  all  cases  of  doubt  the  retirement 
board  was  empowered  to  determine  whether  the  person  is 
an  "employee"  as  defined  in  the  act.  The  term  "public 
schools"  is  interpreted  as — 

any  class  school,  high  school,  normal  school,  training 
school,  vocational  school,  truant  school,  parental  school  or 
any  or  all  classes  of  schools  within  the  State  of  Pennsyl- 
vania conducted  under  the  order  and  superintendence  of  the 
Department  of  Public  Instruction  of  the  Commonwealth  of 
Pennsylvania  and  of  a  duly  elected  or  appointed  board  of 
public  education,  board  of  school  directors  or  board  of  trust- 

1Civil  Service  employees  connected  with  the  school  system  are  not  elig- 
ible to  membership  in  the  fund. 

39 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ees  of  the  Commonwealth  or  of  any  school  district  or  normal 
school  district  thereof  and  shall  include  the  offices  of  the 
State  Department  of  Public  Instruction  and  the  State  Board 
of  Education. 

In  the  states  and  cities  in  which  pension  systems  have  only 
recently  been  established,  this  tendency  to  extend  pension 
benefits  to  classes  of  the  school  personnel  not  previously  pro- 
vided for  has  as  yet  not  appeared,  but  its  early  development 
there,  too,  may  be  expected. 

Extension  of  Systems  to  Contingencies  other  than  Super- 
annuation. The  desire  to  make  a  provision  for  old  age  is 
almost  invariably  the  primary  and  quite  frequently  the 
sole  object  had  in  view  in  the  establishment  of  a  pension  sys- 
tem. It  is  urged  by  the  employees,  especially  the  old  em- 
ployees, who  usually  are  most  interested  in  the  establishment 
of  the  system,  as  the  main  contingency  which  should  be  pro- 
vided for.  It  is  urged  by  the  employer  as  the  most  important 
provision  from  the  point  of  view  of  efficiency  of  service. 

In  a  broader  view  of  the  problem,  the  retirement  plan 
should  provide  benefits  to  a  large  part  or  all  of  the  members 
of  the  school  system.  It  should  deal  with  the  contingencies 
not  only  of  superannuation  and  of  disability  after  long  serv- 
ice, but  of  death,  of  disability  at  any  time,  and  of  resignation 
and  dismissal. 

On  account  of  the  short  period  in  which  teachers'  pen- 
sion funds  have  been  in  operation  in  the  United  States, 
the  scope  of  their  provisions  is  rather  limited.  The  princi- 
pal objects  are,  naturally,  the  retirement  of  the  superannuated 
and  the  disabled.  Of  the  twenty-four  systems  discussed  in 
the  latter  part  of  this  volume,  only  those  of  Maine  and 
Pittsburgh,  and  the  State  Pension  System  of  New  Jersey 
restrict  their  benefits  to  superannuated  teachers.  The  other 
twenty-one  systems  provide  "disability"  pensions  after  various 
minimum  terms  of  service,  in  addition  to  "superannuation" 
or  "service"  pensions. 

40 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

The  contingencies  of  death,  resignation  and  dismissal  are 
inadequately  considered  or  not  considered  at  all  in  the 
majority  of  the  existing  systems.  Of  the  nineteen  contrib- 
utory systems  discussed,  only  Massachusetts  and  the  new 
systems  of  New  York  City,  Pennsylvania  and  Connecticut 
refund  all  contributions  with  interest  in  case  of  resigna- 
tion, dismissal  or  death,  or  provide  certain  optional  benefits. 
Ten  systems  refund  one-half  of  all  the  contributions  but 
without  interest  in  case  of  resignation,  seven  do  it  in  case 
of  dismissal,  and  only  four  return  one-half  of  all  the  con- 
tributions but  without  interest  to  dependents  in  the  event  of 
death.  Three  systems  including  the  New  Jersey  Retirement 
Fund,  and  the  California  and  Virginia  systems  offer  no  re- 
funds in  any  event. 

A  great  obstacle  to  the  inclusion  in  the  existing  systems 
of  provisions  against  other  contingencies  than  superannua- 
tion and  disability  is  the  fact  that  the  contributions  provided 
in  the  existing  systems,  as  later  shown,  are  utterly  inadequate  to 
support  even  the  limited  scope  of  benefits  now  provided.  Before 
the  scope  of  benefits  of  the  majority  of  the  existing  systems 
can  be  broadened,  steps  must  therefore  be  taken  to  reorganize 
these  systems  on  an  adequate  and  permanent  financial  basis. 
Such  a  reorganization  will  inevitably  involve  also  a  recogni- 
tion of  the  importance  of  the  contingencies  of  death,  resig- 
nation and  dismissal,  and  the  introduction  of  new  benefits, 
which  will  be  adjusted  according  to  the  importance  of  the 
contingencies,  and  also  according  to  the  cost  involved  in 
providing  against  them. 

Conditions   under   which    Benefits    Should   be    Granted. 

The  several  contingencies  against  which  the  system  is  to  pro- 
vide having  been  determined  upon  from  a  consideration  of 
both  the  needs  of  the  service  and  the  approximate  income 
to  be  anticipated  for  the  fund,  there  remain  to  be  determined 
the  exact  conditions  under  which  the  benefits  corresponding 

41 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

to  each  contingency  are  to  be  granted.     As  to  each  of  these 
benefits  there  arise  special  problems. 

Superannuation  Benefit.  Superannuation,  that  is,  inca- 
pacity caused  by  old  age,  does  not  come  suddenly.  It  is 
difficult  to  detect  the  exact  time  when  the  teacher  or  any 
other  employee  has  become  incapacitated  for  further  effi- 
cient teaching  or  the  performance  of  other  services.  In 
view  of  this  difficulty  a  pension  system  cannot  leave  it  to 
the  discretion  of  a  superior  officer  to  decide  when  the  teacher 
or  other  employee  is  superannuated.  The  system  must  fix 
certain  minimum  conditions  after  fulfilling  which  the  old 
employee  shall  be  allowed  to  retire  on  a  pension  whenever 
he  feels  himself  incapacitated.  The  employees  are  interested 
in  having  these  conditions  so  fixed  that  they  shall  not  be 
tied  to  the  service  beyond  the  time  of  exhaustion.  The 
employer  urges  that  the  conditions  be  fixed  neither  too  low 
nor  too  high,  so  that  he  will  neither  lose  the  services  of 
efficient  employees  through  premature  retirement  nor  be 
burdened  with  dead  wood  which  should  be  eliminated.  Public 
interest  requires  that  every  individual  should  work  as  long 
as  he  is  capable  of  rendering  service  and  should  retire  from 
work,  without  being  exposed  to  want,  when  he  is  no  longer 
efficient. 

The  practical  reconciliation  of  these  conflicting  require- 
ments is  not  easily  effected.  Opinions  may  differ  as  to 
whether  age  or  long  service,  or  both  combined,  furnish  the 
most  accurate  index  of  superannuation.  Furthermore,  dif- 
ferent opinions  may  exist  as  to  the  exact  minimum  age  and 
minimum  length  of  service  which  should  be  adopted.  Some 
urge  that  a  teacher  sixty  years  of  age  is  too  old  to  continue 
teaching;  others  that  at  that  age  a  teacher  is  usually  still 
capable  of  teaching  and  that  the  age  of  sixty-five  is  more 
appropriate.  Still  others  contend  that  a  teacher  who  has 
taught  for  thirty  years  is  usually  worn  out  though  he  may 
be  only  fifty  years  of  age;  while  others  may  maintain  that 

42 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

thirty  years  of  service  is  too  low,   and  that  thirty-five  or 
even  forty  years  should  be  adopted. 

In  this  conflict  of  opinion  a  satisfactory  solution  of  the 
problem  of  fixing  the  conditions  of  superannuation  can  be 
obtained  only  if  a  thorough  investigation  is  made  of  the 
hazards  of  the  occupation,  the  average  conditions  un- 
der which  superannuation  takes  place  in  the  particular 
service,  the  special  requirements  of  efficiency,  and  the  dif- 
ferences in  cost  of  the  benefits  which  will  result  from  adopting 
one  or  the  other  age  requirement  or  length  of  service  con- 
dition. 

Disability.  The  problem  of  premature  disability  is  not 
generally  appreciated  in  the  working  out  of  pension  systems. 
The  old  employees  are  past  its  dangers.  The  young  em- 
ployees feeling  themselves  in  full  vigor  seldom  realize  that 
disability  may  strike  them  at  any  moment.  The  superior 
officers  or  the  employers  do  not  appreciate  the  importance  of 
a  provision  for  disability  so  much  as  they  do  that  for  old  age, 
because  the  cases  of  early  disability  are  less  frequent,  and 
the  connection  with  the  service  in  the  case  of  a  young  em- 
ployee who  becomes  incapacitated  is  usually  less  strong  and 
less  intimate.  And  yet  the  hardship  which  premature  dis- 
ability may  cause  when  one  is  young  may  be  far  greater 
than  if  incapacity  comes  in  old  age  when  one's  children,  if 
there  are  any,  are  grown  and  the  responsibilities  correspond- 
ingly lighter.  Cases  may  arise  where  without  such  provision 
it  would  be  exceedingly  difficult  to  separate  the  disabled 
employee  from  the  service  and  where  considerable  harm  to 
efficiency  would  result.  Slowly,  therefore,  the  great  im- 
portance of  disability  provisions  is  coming  to  be  understood. 

With  regard  to  conditions  under  which  benefits  in  case 
of  disability  should  be  offered,  the  question  arises  whether 
pensions  shall  be  paid  without  regard  to  the  length  of  service 
of  the  disabled  employee,  or  whether  they  shall  be  paid  only 
in  cases  where  the  disabled  employee  has  been  connected 

43 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

with  the  service  for  a  certain  period  of  time.  It  may  be 
highly  desirable  from  the  standpoint  of  the  employee's  interest 
that  adequate  protection  against  disability  should  be  pro- 
vided regardless  of  length  of  service,  because  disability  may 
come  at  any  time;  and  yet,  from  the  employer's  point  of 
view,  there  may  be  no  justification  for  his  contributing  to 
the  pension  of  an  employee  who  has  but  recently  joined  his 
service,  and  perhaps  was  not  in  sound  physical  health  when 
he  entered  the  service. 

As  a  practical  expedient  under  such  conditions,  it  may 
be  proposed  that  the  provision  for  disabilities,  taking  place  be- 
fore a  certain  length  of  service,  may  be  entirely  at  the  ex- 
pense of  the  employees  affected,  either  through  coopera- 
tive insurance  or  individual  saving,  and  that  only  for  cases 
of  disability  after  that  period  shall  a  pension  be  provided, 
in  the  cost  of  which  the  employer  participates.  If  this  be 
done,  the  question  presents  itself :  What  shall  this  minimum 
period  be?  Shall  it  be  for  ten,  fifteen  or  twenty  years?  In 
deciding  this  question  the  framers  of  the  system  must  con- 
sider not  only  the  protection  of  the  employees,  the  good  of 
the  service,  and  the  public  interest  in  the  disability  problem, 
but  also  the  cost  involved  in  disability  benefits  offered. 

There  are  also  other  problems  of  disability  conditions  which 
cannot  be  neglected.  These  pertain  to  the  administrative 
aspects  of  disability  benefits,  such  as  medical  examinations, 
periodical  reexaminations,  and  the  revocation  of  benefits  on 
termination  of  disability. 

Death  Benefits.  Provisions  for  dependents  in  case  of 
death  may  be  highly  desirable  from  the  point  of  view  of 
the  men  teachers  who  usually  have  family  responsibilities 
and  are  unable  to  purchase  a  sufficient  amount  of  insurance 
in  an  ordinary  way  and  at  the  ordinary  prices.  Women 
teachers  who  usually  are  unmarried  may  be  indifferent  to 
this  class  of  benefits,  or  they  may  even  oppose  their  inclusion 
in  the  system,  on  the  ground  that  death  benefits  being  ex- 

44 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

eluded  their  contributions  could  be  reduced  or  their  super- 
annuation benefits  increased. 

The  city  or  state  may  take  the  view  that  death  automat- 
ically releases  the  teacher  from  the  service  and  that  the 
problem  of  dependents  is  a  private  matter  in  which  it  is 
not  concerned;  or  it  may  take  the  opposite  view  and  decide 
that  it  would  stabilize  and  increase  the  efficiency  of  the  per- 
sonnel and  attract  to  the  service  a  better  type  of  teacher 
if  the  system  were  to  offer  protection  against  the  gravest 
contingency  of  life,  against  which  protection  is  most  fre- 
quently sought. 

A  multiplicity  of  questions  arise  in  considering  the  con- 
ditions under  which  death  benefits  should  be  provided.  A 
minimum  period  of  service  may  be  advocated,  after  which, 
in  case  of  death,  a  benefit  should  be  offered  to  dependents 
partly  at  the  expense  of  the  employer.  The  difference  in 
economic  status  as  wrell  as  in  relation  to  the  service  between 
an  active  employee  and  a  pensioner  may  be  emphasized  and 
different  benefits  suggested  according  as  death  takes  place 
before  or  after  retirement.  The  difference  between  the  eco- 
nomic conditions  of  different  individuals  may  be  pointed  to 
and  various  optional  benefits  advocated.  For  an  intelligent 
decision  of  these  various  questions  actuarial  estimates  of 
the  cost  of  various  death  benefits  must  be  prepared,  for  it 
may  be  found  that  what  would  be  highly  desirable  would  be 
too  costly. 

Withdrawal  Benefits.  The  framers  of  the  system  may 
find  that  considerable  differences  of  opinion  exist  among  em- 
ployees and  employers  as  to  the  conditions  under  which  with- 
drawal benefits,  to  be  paid  in  case  of  resignation  or  dismissal, 
should  be  offered.  Some  employees,  most  probably  the  older 
ones,  may  take  the  view  that  these  benefits  should  be  given 
only  after  the  employee  has  been  connected  with  the  service 
for  a  certain  period  of  years,  which  may  be  variously  esti- 
mated at  two,  five,  ten  or  even  a  greater  number  of  years.  On 

45 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  other  hand  the  younger  employees  will  be  better  satisfied 
if  their  contributions  are  returned  to  them  in  case  of  resigna- 
tion or  dismissal,  regardless  of  length  of  service. 

The  government  on  its  side  may  seek  to  stabilize  the 
teaching  force  by  holding  over  the  heads  of  the  teachers 
the  constant  threat  that  should  they  resign  or  be  dismissed 
they  will  forfeit  all  their  pension  rights  and  also  all  their 
contributions.  On  the  other  hand,  it  may  decide  in  favor 
of  withdrawal  benefits  if  it  finds  that  in  absence  of  such 
benefits  the  service  would  become  overburdened  with  in- 
efficient teachers  who  would  neither  resign,  fearing  to  lose 
their  pension  rights  and  contributions,  nor  be  dismissed  by 
their  superiors,  who  would  not  wish  to  inflict  upon  them  the 
heavy  punishment  of  forfeiture  of  their  contributions. 

A  decision  on  this  point  is  far-reaching  in  its  effect.  It 
may  affect  the  condition  not  only  in  the  particular  service, 
city  or  state,  but  also  in  other  services  and  places.  With- 
drawal benefits  offered  upon  leaving  the  service  at  any  time 
or  some  arrangement  for  transferring  the  teacher's  contri- 
butions or  crediting  him  with  them  at  his  new  place  of 
employment  will  facilitate  a  free  migration  of  teachers.  A 
restricting  condition  imposed  upon  these  benefits  will  act 
as  a  check  against  this  migration.  From  this  point  of  view 
the  effect  of  one  or  the  other  provision  would  be  good  or 
bad  according  to  whether  migration  and  interchange  of 
teachers  between  schools  is  regarded  as  desirable  as  a  means 
of  broadening  the  experience  of  teachers  and  raising  the 
educational  standards  of  the  schools  throughout  the  coun- 
try, or  whether  a  greater  stability  of  the  teaching  personnel 
is  deemed  necessary.  If  the  latter  end  is  sought  the  analysis 
must  be  carried  further:  it  must  be  ascertained  whether  for- 
feiture of  contributions  would  prevent  the  more  able  among 
the  teachers,  rather  than  the  less  able,  from  leaving  the 
service. 

Finally,  the  question  must  be  considered  whether  or  not 

46 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

it  is  just  that  an  individual  who  happens  to  leave  a  particular 
service  after  a  comparatively  short  space  of  time  should  for- 
feit all  the  contributions  which  he  made  during  the  past 
years  and  should  begin  anew  in  his  effort  to  provide  against 
old  age,  death,  etc. 

Amount  of  Benefits.  The  problem  of  fixing  the  amount  of 
benefits  to  be  provided  is  probably  the  most  complicated 
one  among  those  faced  by  the  framers  of  a  system.  The 
employees,  on  the  one  side,  seek  to  obtain  greater  benefits; 
the  employer,  on  the  other  hand,  seeks  to  obtain  the  desired 
results  with  smaller  benefits.  The  highly  paid  employees  are 
interested  in  benefits  proportionate  to  their  high  salaries, 
whereas  the  low  paid  often  favor  the  reduction  of  the  high 
benefits  at  the  top  of  the  scale  in  order  to  make  possible  the 
payment  of  higher  benefits  at  the  bottom  of  the  scale  and  the 
establishment  in  this  way  of  one  uniform  benefit  of  a  flat 
amount  according  to  the  average  need.  The  employer  may 
be  inclined  toward  graduating  benefits  according  to  salary 
and  length  of  service.  If  the  latter  principle  is  adopted, 
opinions  may  differ  as  to  whether  the  salary  of  the  last  year 
or  an  average  throughout  a  period  of  years  should  be  taken  as 
a  basis  for  the  computation  of  the  benefit,  and  what  the  period 
for  this  average  should  be.  Objections  may  be  raised  to  the 
adoption  of  the  salary  basis  on  the  ground  that  contributions 
would  be  calculated  according  to  average  advancement  and 
that  the  employee  who  advances  more  rapidly  than  the  aver- 
age would  receive  a  greater  benefit  than  he  has  been  paying 
for;  whereas  the  employee  who  advances  more  slowly  would 
receive  less  than  what  he  has  been  paying  for.  Finally,  differ- 
ences of  opinion  may  arise  as  to  the  exact  amount  of  the 
benefit  or  the  exact  proportion  which  it  shall  have  to  the  salary. 
In  deciding  these  questions,  the  framers  of  the  system 
must  have  before  them  actuarial  estimates  of  the  cost  of 
various  benefits  proposed.  They  must  consider  the  economic 

47 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

needs  of  the  employees  with  the  view  of  making  the  benefits 
adequate  but  not  extravagant.  They  must  consider  the 
dictates  of  efficient  service,  which  require  that  the  benefits 
should  increase  either  directly  or  indirectly  in  accordance 
with  longer  service,  so  as  to  induce  an  employee  to  continue 
in  service  after  he  has  completed  the  minimum  require- 
ments and  until  he  feels  that  he  can  no  longer  efficiently 
perform  his  duties.  They  must  also  determine  whether 
or  not  a  minimum  and  maximum  benefit  for  the  lowest  and 
highest  salaried  men  would  be  desirable. 

With  regard  to  the  disability  benefit,  the  framers  of  the 
system  must  consider  the  difference  in  the  economic  situation 
of  the  disabled  employee  as  compared  with  that  of  the  super- 
annuated, as  well  as  the  fact  that  the  total  amount  contributed 
before  disability  occurs  is  usually  smaller  and  the  cost  not 
the  same  because  of  the  different  ages  and  rates  of  mor- 
tality. In  accordance  with  these  considerations  it  may  be 
necessary  to  fix  the  benefits  at  a  rate  somewhat  different  from 
that  for  superannuation,  and  further  adjustments  may  be 
necessary  in  cases  where  disability  almost  merges  with  super- 
annuation. 

The  fixing  of  the  amount  of  withdrawal  benefits  presents 
a  comparatively  simple  problem  since  it  is  usually  solved  by 
returning  to  the  employee  the  contributions  which  he  has 
made,  either  with  or  without  interest  compounded  thereon. 

Division  of  Cost  between  Employer  and  Employees. 
After  the  framers  of  a  system  have  decided  on  the  benefits 
which  the  system  shall  provide,  have  had  prepared  actuarial 
estimates  of  the  obligations  under  these  benefits  and  of  the 
cost  of  the  system,  and  have  determined  the  general  method 
of  meeting  the  financial  obligations,  they  are  ready  to  take 
up  with  the  employer  and  the  employees  the  question  as  to 
who  shall  bear  the  cost  of  the  system  and  how  the  cost  shall 
be  divided. 

The   framers  of  the  system  usually  find  that  this  ques- 

48 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

tion  arouses  a  heated  discussion.  On  one  side  are  the  advocates 
of  the  "wholly  contributory"  idea,  according  to  which  the 
system  should  be  supported  entirely  by  dues  from  the  em- 
ployees themselves.  On  the  other  side  are  the  exponents 
of  the  "non-contributory"  idea,  who  claim  that  the  employees 
should  not  be  required  to  contribute  and  that  the  system 
should  be  operated  entirely  at  the  expense  of  the  employer. 
Between  the  two  camps  are  those  who  favor  a  compromise, 
according  to  which  the  cost  will  be  borne  jointly  by  the 
employees  and  the  employer  and  known  as  "partly  or  jointly 
contributory." 

The  employer  may  urge  the  framers  of  a  pension  system 
to  adopt  the  wholly  contributory  basis  because  then  he  would 
not  need  to  contribute  to  the  system.  A  group  of  employees 
may  advocate  its  adoption  believing  that  it  will  assure  them 
greater  control  over  their  fund  and  benefits. 

Another  group  of  employees  may  strongly  object  to  the 
adoption  of  such  a  basis.  They  may  argue  that  it  would 
be  unfair  to  charge  them  with  the  entire  cost  of  a  system 
which  benefits  the  employer  to  a  considerable  extent.  An 
economist  may  argue  that  it  will  result  in  the  eventual 
shifting  of  a  part  or  all  of  the  cost  on  the  employer  in  the 
form  of  an  increase  of  wages  which  will  have  to  be  granted 
on  that  account,  and  that  the  system  will  eventually  change 
to  the  partly  contributory  or  non-contributory  basis.  If  the 
argument  is  urged  that  the  contributions  required  will  be  too 
great  in  proportion  to  the  salaries  from  which  they  are  to 
be  deducted,  the  answer  may  be  advanced  that  the  salaries 
should  be  increased  so  as  to  enable  the  employees  to  make 
these  contributions;  and  that  if  this  solution  can  not  be 
applied  to  the  employees  already  in  the  service  it  can  at 
least  be  applied  to  new  entrants. 

The  old  employees  usually  urge  the  adoption  of  a  non-con- 
tributory basis  for  they  claim  a  pension  as  a  gratuity  in  rec- 
ognition of  long  and  faithful  service.  The  young  employees 

49 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

may  support  them  in  this  demand,  but  for  a  different  rea- 
son: they  want  their  entire  salary  for  the  satisfaction  of 
their  immediate  wants  and  care  little  to  set  aside  anything 
for  the  contingencies  of  a  future  which  they  believe  to  be 
remote.  The  employer  may  favor  the  idea  of  a  gratuitous 
pension  because  it  permits  him  to  exercise  a  greater  control 
over  his  employees,  to  include  in  the  system  only  such  bene- 
fits as  he  desires  to  give,  and  to  exclude  the  employees  from 
management  of  the  system. 

On  the  other  hand,  the  more  independent  employees  may 
fear  that  a  non-contributory  system  will  curtail  their  freedom ; 
they  may  object  to  it  because  it  usually  does  not  offer  with- 
drawal benefits  and  give  the  employees  a  voice  in  the  man- 
agement. They  prefer  a  system  in  which  their  interests 
and  desires  will  be  considered  equally  with  those  of  the 
employer  and  in  the  control  of  which  they  will  participate. 
They  want  other  benefits  than  those  usually  provided  by  a 
non-contributory  system  and  they  are  willing  to  pay  for 
them. 

Economists  may  differ  in  their  opinion  on  this  point.  Some 
may  argue  that  it  makes  no  difference  in  the  long  run  which 
basis  is  adopted,  that  the  incidence  of  cost  will  eventually  fall 
upon  the  employees;  that  since  the  employer  will  depress 
salaries  on  account  of  the  pensions  he  pays,  a  non-contrib- 
utory system  will  become  "contributory"  in  a  disguised 
form,  and  the  "gratuity"  will  change  into  "deferred  pay- 
ments" and  become  a  part  of  the  compensation.  Other 
economists  may  argue  that  it  will  make  a  considerable  dif- 
ference which  basis  is  adopted  because  it  will  differently 
affect  various  groups  among  the  employees;  the  older  em- 
ployees will  retire  before  the  depressing  forces  fully  develop 
and  affect  their  wages;  the  younger  generation  will  be  far 
more  exposed  to  these  forces  and  will  have  to  pay  for  the 
benefits  of  the  older,  besides  paying  for  their  own  prospec- 
tive benefits. 

50 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

The  employer  may  take  the  practical  view  that  while  it  may 
be  theoretically  correct  that  eventually  a  part  of  his  burden 
on  account  of  a  non-contributory  system  will  be  shifted  upon 
the  employees,  in  the  meanwhile  he  will  have  to  bear  the 
entire  burden.  If  he  has  been  furnished  with  an  actuarial 
estimate  of  cost  involved  he  may  find  that  the  burden  will  be 
too  great  for  him  to  bear  alone. 

The  actuary  may  find  from  experience  that  the  non-con- 
tributory basis  is  ill  adapted  to  the  establishment  of  a  sound 
actuarial  system,  because  the  employer  will  sacrifice  the 
actuarial  soundness  of  the  system  rather  than  pay  the  high 
contributions  which  will  be  required. 

The  public  which  promotes  voluntary  and  compulsory  sav- 
ings among  its  members  may  object  to  the  establishment  of 
a  non-contributory  system  on  the  ground  that  it  absolves  a 
group  of  wage-earners  from  any  obligation  to  save;  will 
be  harmful  to  the  individual  as  well  as  society  at  large; 
will  lead  to  the  establishment  of  similar  gratuitous  benefits 
for  other  wage-earners,  and  block  the  spreading  of  the 
social  insurance  movement. 

Lastly,  a  group  of  employees  and  the  employer  may  agree 
to  contribute  jointly  to  the  system,  and  yet  they  may  widely 
disagree  as  to  how  the  cost  shall  be  divided.  Each  side 
may  claim  that  the  other  will  benefit  from  the  establish- 
ment of  the  system  more  than  the  other  and  should,  there- 
fore, bear  the  major  part  of  the  cost.  Some  employees  may 
agree  to  a  deduction  from  their  salary  of  I  per  cent  but 
oppose  any  greater  deduction,  leaving  it  to  the  employer 
to  supply  the  balance  of  10  or  n  per  cent  or  more.  Others 
may  agree  to  a  contribution  of  2  or  3  per  cent,  but  object 
to  a  higher  contribution  on  the  ground  that  it  will  be  equiva- 
lent to  a  reduction  of  wages.  On  the  other  hand,  the  em- 
ployer may  believe  that  the  employees  can  well  afford  to 
contribute  8  per  cent  or  even  more  and  that  a  contribution  on 
his  part  of  3  or  4  per  cent  will  be  sufficiently  generous. 

51 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

It  may  be  suggested  that  the  employer  contribute  each 
year  a  uniform  percentage  of  salary  on  account  of  all  em- 
ployees, or  that  he  match  the  contribution  of  every  em- 
ployee, or  that  he  contribute  only  on  account  of  that  number 
of  employees  who,  according  to  actuarial  estimates,  will 
apply  for  retirement.  Different  methods  of  contributing 
may  be  suggested  for  creating  a  reserve  against  the  accrued 
liabilities.  It  may  be  proposed  that  the  employer  create 
this  reserve  by  means  of  equal  annual  instalments  of  a  cer- 
tain amount  during  a  certain  period  of  years.  Opinions  may 
differ  as  to  whether  that  period  shall  be  fixed  at  one  hun- 
dred, sixty,  forty  or  a  less  number  of  years.  From  the  point 
of  view  of  stability  of  the  system  it  may  be  highly  desirable 
to  liquidate  the  deficiency  within  a  short  space  of  time.  From 
the  point  of  view  of  the  employer,  considering  other  ex- 
penditures, it  may  be  desirable  to  spread  the  deficiency  over 
a  longer  period  and  make  the  annual  contribution  smaller. 

The  entire  controversy  may  thus  develop  into  one  of 
bargaining  between  the  two  sides.  The  employees  who 
insist  on  paying  less  than  3  per  cent  may  offer  to  pay  i 
per  cent  more  on  the  condition  that  the  retirement  age  be 
lowered  a  few  years  or  changed  to  straight  service  retire- 
ment, or  that  the  scale  of  benefits  be  increased,  or  the  bene- 
fits of  higher  paid  employees  reduced,  or  the  proposed  system 
changed  in  some  other  respect.  The  most  vital  parts  of 
a  carefully  worked  out  system  may  suddenly  have  to  be 
sacrificed  and  replaced  by  less  sound  provisions  for  the  sake  of 
effecting  a  bargain. 

In  view  of  this  wide  range  of  opinion  and  danger  of 
failing  because  of  the  inability  to  agree  on  the  matter  of 
contributions,  the  task  of  dividing  the  cost  of  a  system  be- 
tween employer  and  employees  becomes  exceedingly  diffi- 
cult. If  the  framers  of  a  system  have  constructed  the  entire 
system  so  as  to  benefit  the  employer  and  employees  in  a 
more  or  less  equal  measure,  then  they  must  also  divide  the 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

cost  of  benefits  more  or  less  equally  between  them.  They 
must  not  only  follow  the  fundamental  idea,  but  also  be  able 
to  impress  it  upon  the  employer  and  the  employees. 

At  the  same  time  they  must  consider  what  exceptions  to 
the  principle — "division  of  cost  according  to  benefits  de- 
rived"— will  be  necessary.  They  must  decide  what  will  be 
the  maximum  amount  or  percentage  of  salary  which  can 
be  exacted  from  the  employees  without  depriving  them  of 
the  necessaries  of  life.  They  may  find  that  in  the  case  of 
new  entrants,  except  those  entering  at  older  ages,  the  con- 
tributions required  will  be  below  the  estimated  maximum, 
and  equal  division  of  cost  between  employer  and  employees 
will  be  entirely  feasible,  but  that  in  the  case  of  the  employees 
already  in  the  service  at  the  time  of  establishment  of  the 
system  and  older  entrants  it  will  not  be  feasible  because 
the  contributions  required  will  be  so  high  as  to  constitute 
for  the  employees  too  great  a  hardship. 

The  division  of  the  cost  of  benefits  for  services  rendered 
prior  to  the  establishment  of  the  system  must  be  considered 
separately  from  that  of  the  benefits  for  future  services.  The 
framers  of  the  system  may  find  that  it  will  not  be  possible 
to  divide  equally  between  employer  and  employees  the  pay- 
ment of  back  contributions  on  account  of  prior  years,  be- 
cause it  will  impose  upon  the  employees  an  impossible  bur- 
den, and  that  the  employer  should  cover  the  major  part  or 
even  the  entire  deficiency;  but  that  it  will  be  entirely  feasible 
to  divide  equally  the  cost  of  benefits  for  future  services. 

The  problem  of  the  lowest  salaried  employees  may  be 
different  in  certain  aspects  from  that  of  other  classes. 
Social  and  other  considerations  may  require  that  in  their  case 
the  employer  undertake  the  major  part  of  the  cost  of  their 
benefits. 

Contributions  of  Individual  Members.  The  distribution 
of  the  cost  of  benefits  among  the  members  of  the  system — that 

53 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

is,  the  fixing  of  the  contributions  of  the  individuals — is  also  a 
highly  complicated  and  technical  problem.  It  forms  an  im- 
portant part  of  the  work  of  the  actuary.  The  framers  of  the 
system  must  take  into  account  the  different  mortality  of  men 
and  women  employees;  the  different  periods  during  which 
entrants  of  various  ages  will  contribute;  the  different  periods 
of  prior  service  which  the  employees  already  in  the  service 
have  to  their  credit  at  the  time  of  establishment  of  the  system; 
the  differences  in  compensation  between  the  higher  and  lower 
salaried  employees;  the  different  rates  of  salary  advancement 
between  various  employees.  Unless  all  these  differences  are 
properly  reflected  in  the  cost  of  the  benefits,  accusations  may 
be  made  that  the  framers  of  the  system  are  taxing  men  in 
favor  of  the  women,  or  vice  versa,  or  making  the  younger 
employees  contribute  for  the  benefit  of  the  older,  or  giving 
higher  salaried  employees  benefits  at  the  expense  of  the  lower 
paid,  and  taxing  those  who  advance  more  slowly  in  favor  of 
those  who  advance  more  rapidly.  Because  of  a  failure  to 
recognize  some  of  these  differences  the  system  may  meet  with 
opposition  from  one  or  the  other  group  of  employees  and  its 
establishment  may  be  seriously  hampered. 

Compulsory  Participation.  After  the  various  phases  of 
the  question  of  contributions  have  been  decided,  the  framers 
of  the  system  are  in  a  better  position  to  effect  an  agreement 
between  the  employer  and  employees  on  the  very  debatable 
question:  Shall  participation  in  the  system  be  made  com- 
pulsory or  voluntary  for  the  employees? 

Many  important  considerations  may  urge  the  establishment 
of  a  compulsory  feature.  It  may  be  imperative  from  the 
point  of  view  of  efficiency  of  service  that  the  system  be  made 
compulsory,  because  the  failure  of  some  employees  to  join 
the  system  may  cause  considerable  harm  to  efficiency  of  ser- 
vice in  case  they  become  superannuated  or  disabled.  The 
interests  of  the  employees  may  require  that  they  be  com- 

54 


TEACHERS'  PENSION  PROBLEM  OUTLINED 

pelled  to  join  the  system  and  be  protected  against  their  own 
improvidence.  Public  interest  may  demand  that  the  wage- 
earners  be  compelled  to  save  and  that  the  society  be  pro- 
tected against  the  individual  becoming  a  public  charge.  It 
may  be  essential  to  the  financial  stability  of  the  system  that 
membership  in  it  be  made  compulsory  as  otherwise  only  a 
few  employees,  mostly  the  older  ones,  might  join  and  the 
system  be  more  exposed  to  accidental  variations  in  the  rates 
of  mortality  and  withdrawal. 

On  the  other  hand,  reasons  may  be  advanced  against  com- 
pulsion. The  employees  may  object  to  any  one  dictating  to 
them  what  is  for  their  own  good.  They  may  claim  that 
participation  in  the  system  was  not  included  in  their  orig- 
inal contract  of  employment  and  that  the  compulsion  would 
be  a  violation  of  their  contractual  rights.  The  opposition 
may  be  entirely  unjustified,  and  yet,  in  order  not  to  jeopardize 
the  system,  its  framers  may  have  to  abandon  the  idea  of 
introducing  compulsion  for  present  employees  and  to  apply 
it  only  to  new  entrants,  because  in  the  latter  case  the  claim 
to  contractual  rights  could  not  be  raised. 

Along  with  its  advantages  the  framers  of  the  system  must 
consider  certain  disadvantages  of  the  compulsory  feature: 
the  contribution  is  deducted  from  the  employee's  salary  and 
becomes  entirely  automatic,  it  requires  no  effort  on  his  part, 
and  in  the  course  of  time  he  may  lose  interest  in  his  pro- 
tection. In  view  of  this  fact  it  may  be  found  desirable 
to  combine  in  a  proper  measure  the  compulsory  and  volun- 
tary features;  to  make  compulsory  certain  minimum  con- 
tributions and  the  discharge  of  certain  minimum  obliga- 
tions, but  leave  optional  higher  contributions  and  the  dis- 
charge of  higher  obligations. 

Right  to  Management.  After  all  the  foregoing  questions 
have  been  decided  the  system  is  almost  completed.  It  remains 
only  to  determine  by  whom  it  shall  be  managed.  The  crea- 
tion of  a  special  body  for  its  management  will  usually  be 

55 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

suggested,  and  the  problem  will  be  to  decide  how  that  body 
shall  be  constituted.  The  employees  may  contend  that  they 
should  control  the  system  and  that  the  members  of  the  retire- 
ment board  should  be  elected  by  them.  The  employer  may 
desire  to  keep  the  entire  control  over  the  system  in  his  own 
hands.  It  may  be  suggested  as  a  compromise  that  the  control 
be  divided.  Then  each  side  may  claim  that  it  should  have  a 
majority  representation  in  the  board. 

Following  the  fundamental  idea  of  the  system,  its 
framers  must  divide  between  the  two  sides  the  responsibility 
for  the  safe  management  of  the  system  in  the  same  measure 
as  the  benefits  and  costs  have  been  divided  between  them. 
They  must  divide  the  control  over  the  system  in  such  a  way 
as  to  safeguard  the  interests  of  both  sides  and  effect  a  settle- 
ment between  them. 

Securing  Enactment  of  the  System.  After  the  system 
has  thus  been  completed  the  problem  is  presented  of  securing 
its  enactment.  While  a  few  leaders  among  the  teachers,  a 
few  superior  officers  of  the  state  or  local  educational  system, 
and  a  few  legislators  have  perhaps  followed  its  preparation 
with  a  great  deal  of  interest,  the  great  mass  of  the  teachers, 
most  of  the  higher  educational  officers,  and  most  of  the  legis- 
lators and  the  public  at  large  have  not  been  advised  in  the 
matter.  Their  attention  will  be  drawn  to  it  only  when  a  bill 
is  actually  introduced  in  the  legislature.  The  framers  of 
the  system  must  satisfy  their  interests  in  the  matter  and  be 
prepared  to  meet  all  objections  that  may  arise.  They  must 
have  a  report  carefully  prepared  explaining  the  conditions 
which  call  for  the  establishment  of  the  system  and  setting 
forth  its  fundamental  principles  and  advantages  to  the  schools, 
the  teachers,  and  the  public  at  large.  Unless  this  is  done  a 
powerful  opposition  may  suddenly  develop  which  will  defeat 
the  bill  and  prevent  the  establishment  of  the  system. 


CHAPTER  III 
SUPERANNUATION  BENEFITS 

The  object  generally  first  considered  in  establishing  a  re- 
tirement system  is  the  release  from  service  of  those  who, 
because  of  advanced  age,  can  no  longer  teach  effectively. 
The  arguments  for  retirement  with  financial  support  in  such 
cases  are  especially  strong  because,  as  a  rule,  a  long  and  faith- 
ful service  can  be  pointed  to. 

Eligibility  for  Superannuation  Benefits.  While  the  jus- 
tice and  the  desirability  of  superannuation  provisions  are  ap- 
parent, great  difficulty  is  experienced  in  determining  the  condi- 
tions of  eligibility.  A  primitive  method  of  dealing  with  this 
problem  was  to  require  of  the  teacher  a  "proof  of  incapacity." 
The  method  is  patently  defective,  because  of  the  difficulty  of 
detecting  and  positively  determining  the  time  when  the  slow 
deterioration  of  the  teacher's  physical  and  mental  powers  has 
so  far  advanced  as  to  incapacitate  him  for  further  service. 
The  shortcomings  of  the  method  have  thus  been  so  apparent 
as  to  result  in  its  general  abandonment  in  this  country  and 
abroad.  The  only  system  in  this  country  which  still  applies 
it  is  the  New  Jersey  Teachers'  Retirement  Fund.1  In  its  place 
have  come  methods  which  base  eligibility  for  retirement  upon 
length  of  service,  or  upon  age,  or  upon  both  combined. 

The  method  which  takes  into  consideration  only  length 
of  service  is  based  on  the  view  that  teaching  is  a  particularly 
exhausting  occupation,  and  that  a  certain  number  of  years 
of  service  exhausts  a  teacher  regardless  of  age.  This  con- 
tention has  never  been  reduced  to  a  definite  statement  by 


fund  has  practically  ceased  to  operate  with  the  enactment  on 
April  10,  1919  of  a  new  retirement  system,  which  is  discussed  in  Chapter 
XVIII. 

57 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

any  scientific  investigation.  From  the  nature  of  the  case, 
the  decision  as  to  the  term  which  is  presumed  to  render  the 
average  teacher  "service  exhausted"  must  necessarily  be  arbi- 
trary ;  in  some  systems  it  is  fixed  at  twenty,  in  others  at  twenty- 
five  or  thirty,  in  still  others  at  thirty-five  or  forty,  and  in  some 
even  at  forty-five  years.  Experience  shows,  however,  that 
no  service  period  is  a  positive  indication  of  superannuation 
and  that  an  early  entrant  may  complete  the  required  period  of 
service  while  still  in  the  prime  of  life,  whereas  a  late  en- 
trant may  complete  it  only  late  in  life  and  perhaps  only 
long  after  he  has  become  superannuated. 

A  far  more  desirable  method  is  to  fix  a  retirement  age, 
on  the  attainment  of  which  a  teacher  may  be  pensioned,  on 
demand,  without  submitting  to  medical  examination.  The 
advantage  of  this  method  lies  in  the  fact  that  it  is  as  effective 
in  the  case  of  late  entrants  as  it  is  in  the  case  of  early  en- 
trants. It  offers  a  good  basis  for  determining  superannua- 
tion, provided  the  age  is  fixed  after  a  careful  investigation  of 
the  occupational  hazards  and  of  the  requirements  of  efficiency 
in  the  particular  service. 

Some  plans  combine  the  "age"  and  "length  of  service" 
methods  and  grant  pensions  upon  the  applicants  fulfilling 
either  a  minimum  age  or  service  condition,  or  both.  The 
advantages  or  disadvantages  of  this  method  depend  on  the 
exact  age  and  service  terms  adopted  and  whether  one  or  the 
other  factor  predominates. 

Credit  for  Outside  Service.  In  the  application  of  the  age 
and  service  requirements  in  any  pension  plan  to  a  service 
which  is  partly  recruited  from  persons  who  have  had  service 
in  other  jurisdictions,  a  serious  difficulty  arises  in  determining 
the  extent  to  which  allowance  shall  be  made  for  such  service. 
In  the  teaching  service  this  complication  is  always  present, 
as  it  is  considered  advantageous  to  encourage  the  employment 
of  teachers  who  have  had  a  number  of  years  of  special  experi- 
ence elsewhere,  while  the  prospect  of  a  protected  old  age  holds 

58 


SUPERANNUATION  BENEFITS 

out  a  strong  inducement  to  the  teachers  themselves  to  make  a 
change,  if  they  are  employed  in  a  system  in  which  unsatis- 
factory retirement  provisions  exist.  When  such  teachers 
after  a  relatively  short  term  of  service  become  superannuated, 
the  question  of  their  release  on  an  adequate  pension  presents 
considerable  difficulty.  It  is  frequently  regarded  as  necessary 
to  credit  them,  not  only  as  respects  eligibility  to  retirement 
but  also  as  respects  the  amount  of  pension,  with  at  least  a 
part  of  the  services  rendered  outside  of  the  system.  In  doing 
this,  however,  a  portion  of  the  pension  is  paid  by  the  retiring 
authority  for  services  from  which  it  has  benefited  only  indi- 
rectly. 

The  question  of  cost  is  adjusted  by  either  requiring  back 
contributions  from  the  teacher  for  the  years  of  prior  service 
credited  for  pension  with  the  government  supplying  the  re- 
maining part,  or  by  placing  the  entire  cost  upon  the  teacher, 
or  by  placing  it  all  upon  the  government.  This  inequitable  bur- 
den could  be  avoided  by  the  interchange  of  appropriate  amounts 
representing  the  worth  of  pension  earned  by  a  teacher  trans- 
ferred from  one  educational  system  to  another.  An  example 
of  such  arrangement  is  offered  by  the  recently  established 
pension  system  of  federated  universities  in  Great  Britain. 
It  is  possible  that  a  similar  practice  will  be  established  in  the 
United  States  when  the  theory  of  teachers'  pensions  has 
had  time  to  develop  and  existing  pension  systems  have  been 
reorganized  on  a  more  uniform  and  business-like  basis.  How- 
ever, the  fact  must  not  be  overlooked  that  our  peculiar  state 
organization  of  government  might  present  some  serious  ob- 
stacles to  the  adoption  of  such  an  arrangement:  the  transfer 
of  state  funds  as  between  different  states  would  be  something 
almost  entirely  new  in  our  governmental  practice. 

Methods  Used  in  Typical  Systems.  Of  the  twenty-four 
state  and  local  pension  systems  analyzed  in  the  second  part 
of  this  volume,  only  two — the  Massachusetts  system  and  the 
Pennsylvania  system — make  the  teacher's  age  the  deciding 

59 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

factor  for  eligibility  to  pension.  Ten  systems  on  the  other 
hand  disregard  the  teacher's  age  and  make  his  claim  to  a 
pension  dependent  on  the  number  of  years  served.  The  mini- 
mum length  of  service,  entitling  teachers  in  these  systems  to 
retirement,  ranges  from  twenty  to  forty  years  as  follows: 
Minnesota  and  Wisconsin,  20  years;  Michigan,  Chicago  and 
Pittsburgh,  25  years;  California,  Cleveland,  Buffalo  and  Bos- 
ton Retirement  Fund,  30  years;  Baltimore,  40  years.  In 
Buffalo,  men  are  required  to  serve  five  years  longer  than 
women,  and  may  retire  only  after  35  years  of  service. 

A  combination  of  minimum  age  and  service  requirements 
for  eligibility  to  retirement  is  provided  in  the  following 
systems : 

State  or  City  Age  Service 

Illinois  50  25  years 

Virginia    50  (58  for  men)  30 

Denver    55  (60  for  men)  25 

Maine 60  25     " 

Philadelphia  60  30 

Boston  Permanent  Fund 65  10     " 

Five  systems  have  alternative  conditions  of  eligibility  to 
pension  on  application.  In  three  of  them  teachers  may  retire 
upon  completing  a  fixed  period  of  service,  or,  having  reached 
a  minimum  age,  may  have  a  less  number  of  teaching  years 
to  their  credit  as  follows:  Connecticut,  35  years'  service 
or  15  years'  service  and  age  60;  New  York  State,  35  years' 
service  or  25  years'  service  and  age  60;  New  Jersey  State 
Pension,  35  years'  service  with  25  in  the  state,  or  last  20 
years'  service  in  state  and  age  70,  or  32  years'  service  and 
age  75.  The  two  other  systems  with  alternative  retirement 
conditions  are  those  of  New  Orleans  and  New  York  City; 
in  which  age  65  or  a  service  of  30  years  in  New  Orleans 
and  35  years  in  New  York  City  is  required  for  eligibility 
to  retirement  on  demand. 

The  New  York  State  system  gives  the  pension  board  the 
right  to  retire,  in  its  discretion,  teachers  who  have  completed 
25  years  of  service.  Realizing  that  such  provision,  if  not 

60 


SUPERANNUATION  BENEFITS 

properly  safeguarded,  might  result  in  premature  retirement 
of  teachers  in  good  health,  the  board  has  adopted  the  follow- 
ing restrictive  resolution: 

Resolved,  that  generally  it  shall  be  the  attitude  of  the  State 
Teachers'  Retirement  Board  to  approve  the  claims  of  all 
applicants  who  have  taught  in  the  public  schools,  as  provided 
by  the  retirement  law,  for  35  years  or  more,  or  who  have 
rendered  such  service  for  at  least  25  years  and  have  reached 
the  age  of  60  or  more  years. 

All  the  systems  under  discussion,  with  the  exception  of 
those  of  Massachusetts,  Connecticut,  Pennsylvania,  Virginia, 
Boston  Permanent  Fund  and  New  Jersey  Retirement  Fund, 
make  special  provision  for  outside  teaching  experience  by  per- 
mitting a  part  of  such  service  to  be  credited  for  pensions. 
These  special  allowances  are  by  no  means  uniform,  as  may 
be  seen  from  the  table  on  the  following  page. 

Dangers  of  Premature  Retirement.  The  principal  lesson 
to  be  drawn  from  a  review  of  the  conditions  of  eligibility 
to  pension  in  the  twenty-four  systems  mentioned  is  the  pos- 
sibility of  premature  retirement.  The  same  criticism  is  ap- 
plicable to  nearly  all  of  the  teachers'  pension  systems  in  the 
United  States.  In  Minnesota,  for  instance,  the  twenty-year 
service  provision  places  an  income  for  life  at  the  disposal 
of  teachers,  who,  if  they  began  teaching  before  they  were 
20,  are  but  from  35  to  40  years  old.  The  eight  systems 
permitting  retirement  after  25  or  30  years  of  service  also 
afford  an  opportunity  for  rather  early  retirement,  when  it  is 
considered  that  the  majority  of  teachers  enter  the  profes- 
sion at  an  early  age.  Where  minimum  age  requirements 
are  in  force,  50  to  55  years  is  quite  frequently  considered 
the  point  of  physical  or  mental  exhaustion  of  the  average 
teacher. 

That  provisions  of  this  nature  work  a  loss  to  the  school 
system  of  efficient  and  capable  teachers  is  a  reasonable  con- 
clusion. A  less  important,  but  none  the  less  practical,  objec- 

61 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


CONDITIONS  FOR  SUPERANNUATION  RETIREMENT 


PENSION  SYSTEM 

MINIMUM  YEARS  OF  SERVICE  ENTITLING 
TO  SUPERANNUATION  PENSION 

Total 

Within 
Jurisdiction 
of 
Retiring 
System 

Credited 
for 
"Outside" 
Ex- 
perience 

States; 
1.  Illinois  

25 

25 
20 
(proof  of 
incapacity) 
35 
35 
(or  60  yrs. 
of  age) 
20 
25 
30 
30 
25 
25 
No  mini- 
mum ser- 
vice; 60 
years  of 
age 
No  mini- 
mum ser- 
vice; 60 
years  of 
age 

35 
25 
30 
30 
10 
30 
25 
40 
30 
(35  for  men) 
30 
25 

15 
15 
20 

25 

All 

15 
18 
15 
30 
15 
20 
All 

All 

20 
15 
20 
15 
10 
10 
12^ 
20 
24 
(28formen) 
10 
15 

10 
10 

None 

10 
None 

5 
7 
15 
None 
10 
5 
None 

None 

15' 
10 
10 
15 
None 
20 

uy* 

20 
6 
(7  for  men) 
20 
10 

2.  New  York  

3.  New  Jersey  Retirement  Fund  

4.  New  Jersey  State  Pension  

5.  Connecticut  

6.  Minnesota  .... 

7.  Wisconsin  

8.  California  

9.  Virginia  

10.  Michigan  

11.  Maine  .  .  .-  

12.  Massachusetts  

13.  Pennsylvania  

Cities; 
1.  New  York  City  

2.  Chicago  

3.  Philadelphia  

4.  Cleveland  

5.  Boston  Permanent  Fund  

6.  Boston  Retirement  Fund  

7.  Pittsburgh  

8.  Baltimore  

9.  Buffalo  

10.  New  Orleans  

11.  Denver  

r»  Fifteen  years  for  new  entrants.    All  outside  service  credited  for  present 
teachers. 


62 


SUPERANNUATION  BENEFITS 

tion  is  the  high  cost  of  early  retirements — a  matter  which 
is  discussed  in  another  section  of  this  volume. 

Compulsory  Retirement.  Minimum  service  and  age  con- 
ditions for  voluntary  retirement  deal  only  with  one  phase  of 
the  superannuation  problem.  The  temptation  to  retire  in  the 
prime  of  life  and,  as  often  occurs,  to  supplement  one's  pension 
after  retirement  with  a  salary  earned  in  another  teaching 
system  or  in  another  occupation,  gradually  disappears  with 
advancing  age  and  reduced  opportunity  for  outside  employ- 
ment. The  prospect  of  a  half-pay  pension  and  consequent 
necessity  for  substantial  reduction  in  one's  standard  of  living 
is  no  inducement  for  the  aged  teacher  to  retire.  Especially 
is  this  true  of  married  men  teachers  if  they  have  families  de- 
pendent upon  their  earnings.  Consequently  the  tendency  of 
the  superannuated  to  remain  in  service  beyond  the  period  of 
usefulness  can  only  be  checked  by  means  of  compulsory  retire- 
ment. 

The  only  effective  method  covering  compulsory  retirement 
is  a  mandatory  provision  in  the  law  for  the  pensioning  of 
teachers  who  have  reached  a  maximum  age  limit.  Such  pro- 
vision exists  in  the  Massachusetts,  Connecticut,  Pennsylvania 
and  New  York  City  systems,  which  automatically  place  in 
retirement  all  teachers  who  reach  the  age  of  70  years.  In 
none  of  the  other  systems  under  discussion  does  such  a  manda- 
tory retirement  provision  exist. 

In  many  systems  the  law  gives  to  the  pensioning  authorities 
the  discretionary  right  to  compel  the  retirement  of  teachers 
who  have  completed  the  minimum  service  and  age  conditions 
for  pensions.  The  usual  experience  in  pension  administration 
is,  however,  that  unless  such  rule  is  made  explicit  and  manda- 
tory, it  fails  to  be  generally  applied,  if  at  all. 

Amount  of  Superannuation  Benefit.  Two  conflicting 
considerations  enter  into  the  determination  of  the  amount 
of  pension  to  be  granted  a  retiring  teacher.  On  the  one  hand, 

63 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

limitation  of  resources  requires  that  the  allowance  be  reduced 
to  the  minimum,  and  be  granted  only  late  in  life  when  its  pay- 
ment will  be  made  only  during  a  short  period.  On  the  other 
hand,  the  effectiveness  of  a  retirement  system  in  inducing  the 
superannuated  to  relinquish  their  active  salaries  depends  to  a 
great  extent  on  the  ability  to  offer  reasonably  high  benefits. 

The  cost  of  pensions  has  rarely  been  given  due  weight  in 
establishing  pension  systems  in  this  country.  As  a  result, 
pensions,  though  small,  are  granted  to  teachers  at  such  an 
early  stage  that  their  payment  over  a  long  period  of  life 
expectancy1  demands  larger  financial  resources  than  have  been 
provided  or  can  conveniently  be  made  available  in  the  future. 
The  amount  of  a  pension  has  generally  been  fixed  by  prece- 
dent. Particularly  is  this  true  of  the  half -pay  pension  idea 
so  generally  accepted  abroad  in  retirement  plans  for  public 
employees,  which  was  adopted  in  the  United  States  in  the 
first  established  pension  systems  and  then  imitated  by  those 
of  more  recent  origin. 

While  this  principle  is  generally  observed  in  teachers'  retire- 
ment systems,  with  respect  to  the  bulk  of  the  personnel,  im- 
portant differences  exist  in  its  application.  Existing  methods 
of  fixing  the  amount  of  pension  may  be  grouped  in  six  classes. 
The  first  of  these,  the  "savings"  method,  is  not  properly  a 
pension  plan  at  all.  The  simplest  pension  method  is  that  which 
fixes  a  "flat"  pension  of  a  uniform  amount  granted  to  all 
retired  teachers,  irrespective  of  differences  in  the  term  of  serv- 
ice or  compensation.  Other  plans  graduate  the  amount  so 
as  to  make  it  accord  with  either  length  of  service  or  rate  of 
compensation  of  the  superannuated  teacher.  A  more  flexible 
method  is  one  which  adjusts  the  amount  so  as  to  reflect  the 
length  of  a  teacher's  service  as  well  as  the  rate  of  compensa- 
tion. Finally,  the  most  flexible  method  is  one  recently  devised, 

lThe  "life  expectancy"  or  "expectation  of  life"  is  different  at  each  age. 
It  represents  the  probable  number  of  years  of  life  that  persons  of  the 
same  age  may  look  forward  to.  See  Appendix  4,  table  5. 

64 


SUPERANNUATION  BENEFITS 

which  divides  the  benefit  into  two  elements  and  makes  one 
dependent  upon  the  contributions  and  age  of  the  teacher, 
and  the  other  upon  his  length  of  service  and  rate  of  com- 
pensation. 

"Savings  or  Thrift"  Systems.  Under  the  pure  savings 
systems  each  teacher's  contributions  are  deposited  at  interest 
and  are  eventually  paid  to  him  in  a  lump  sum.  The  advantage 
of  this  method  lies  in  the  fact  that  no  one  forfeits  any  part 
of  his  contribution  or  receives  more  than  he  contributed  at 
the  expense  of  another;  further,  it  is  not  necessary  to  investi- 
gate the  rates  of  withdrawal,  mortality  and  other  factors 
determining  cost.  On  the  other  hand,  the  disadvantage  of 
this  method  is  that  it  is  a  matter  of  chance  whether  the  amount 
ultimately  received  by  the  member  has  any  relation  to  his 
need  for  financial  relief.  Thus,  the  sum  of  $1,000  might  be 
more  than  enough  in  the  case  of  a  member  who  lives  but 
a  year  after  retirement,  but  would  be  utterly  inadequate  in 
the  case  of  a  member  who  lives  a  prolonged  period.  Out  of 
the  twenty-four  systems  selected  for  study,  not  one  is  operated 
under  this  method. 

"Flat"  Pension.  In  "flat"  pension  systems  the  amount 
generally  approximates  one-half  of  the  annual  rate  of  com- 
pensation. While  possibly  satisfactory  to  a  majority  of 
teachers,  this  schedule  is  inequitable  to  those  whose  ambition 
has  advanced  them  to  the  higher  paying  positions  or  who  have 
remained  at  work  for  exceptionally  long  terms.  From  the 
viewpoint  of  the  state  or  the  city  the  "flat"  pension  is  dis- 
advantageous because  it  fails  to  facilitate  the  release  of  super- 
annuated teachers  and  supervisors  from  places  of  higher 
responsibility.  For  these  reasons  "flat"  pensions  are  rarely 
adopted.  Of  the  twenty-four  systems  subjected  to  analysis, 
only  four  provide  uniform  pensions  and  one  of  these,  that  of 
Pittsburgh,  is  now  contemplating  granting  pensions  graduated 
according  to  length  of  service.  In  the  four  "flat"  pension  sys- 

65 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


terns  referred  to,  the  amounts  of  uniform  benefits  and  the  mini- 
mum retirement  conditions  are  as  follows  i1 


Pension  System 

Illinois     

California  . . . 

Chicago   

Pittsburgh. . . 


Amount  of  Minimum  Retirement  Conditions 

"Flat"  Pension  Years  of  Service  Age 

$400  25  SO 

500  30 

400  25  — 

500  25  — 

Amount  of  Pension  Determined  by  Length  of  Service. 
The  method  of  graduating  pensions  to  accord  with  the  length 
of  service  is  more  equitable  to  the  majority  of  the  teaching 
personnel  than  the  "flat"  pension  method,  because  it  provides 
"more  pension  for  more  service."  It  is  likewise  more  advan- 
tageous to  the  school  system,  since  the  prospect  of  increase 
in  pension  tends  to  keep  teachers  in  the  service  who  other- 
wise might  avail  themselves  of  their  retirement  privileges  at 
the  first  opportunity.  There  remains,  however,  the  serious 
objection  of  inadequate  pensions  for  teachers  of  the  higher 
grades  who  are  expected  to  retire  on  a  considerably  smaller 
proportion  of  their  salaries  than  the  majority  of  the  teaching 
force. 

Five  of  the  twenty- four  analyzed  systems  provide  "length 
of  service"  pensions  as  shown  in  the  table  below. 
"LENGTH  OF  SERVICE"  PENSIONS 


PENSION 

Amount  Allowed 
for  Each 

PENSION 

MINIMUM  RETIRE- 
MENT CONDITIONS 

Average 

SYSTEM 

Year  of 

Pension 

Service 

Years 

Minimum 

Maximum 

of 

Age 

Service 

Minnesota.  . 

$17.50 

$350.00 

$500 

20 

(for  service  up 

to  20  years) 

$30.00 

(for  service 

after  20  years) 

Wisconsin  .  . 

$12.50 

312.50 

450 

25 

$365.96  * 

'This  statement  excludes  the  "flat"  pension  of  the  Boston  Teachers' 
Retirement  Fund,  which  originally  amounted  to  $180  per  annum,  but  was 
recently  reduced  to  $120  per  annum.  These  "flat"  pensions  are  supple- 
mented by  considerably  larger  graduated  allowances  from  the  Boston 
Permanent  School  Pension  Fund.  The  combined  operation  of  both 
funds  may,  therefore,  be  considered  as  a  system  of  graduated  pensions. 

2As  of  September  i,  1915.  In  obtaining  the  average  one  disability  pen- 
sion of  less  than  $312.50  per  annum  was  included. 

66 


SUPERANNUATION  BENEFITS 


"LENGTH  OF  SERVICE"  PENSIONS — Continued 


Amount  Allowed 

PENSION 

MINIMUM  RETIRE- 
MENT CONDITIONS 

PENSION 

for  Each 

Average 

SYSTEM 

Year  of 

Years 

Pension 

Service 

Minimum 

Maximum 

of 

Age 

Service 

Maine  

$6.00 

150.00 

250 

25 

60 

107.311 

(for  service  up) 

to  25  years) 

$10.00 

(for  service 

after  25  years) 

Cleveland.  . 

$12.50 

375.00 

450 

30 

.. 

•  • 

Denver.  .  .  . 

19.20 

480 

25 

55 

(60  for 

men) 

It  will  be  noted  that  in  all  but  one  of  these  systems  an 
inducement  is  held  out  to  teachers  to  remain  in  the  service 
after  the  expiration  of  the  minimum  period  of  service  required 
for  retirement,  by  permitting  the  increase  in  the  amount  of 
pension  allowed  to  run  on  after  such  period,  for  periods  vari- 
ously fixed  at  five  years  in  Minnesota,  six  years  in  Cleveland, 
ten  years  in  Maine  and  eleven  years  in  Wisconsin. 

Amount  of  Pension  Determined  by  Salary.  A  large 
number  of  teachers'  retirement  systems  in  this  country  have 
adopted  the  method  of  adjusting  pensions  to  the  teacher's 
rate  of  pay  at  the  time  of  retirement,  or  to  the  average  rate 
of  pay  during  a  period  of  years  preceding  it.  One-half  of  the 
salary  is  generally  granted  with  certain  minimum  and  maxi- 
mum limitations.  This  method  is  in  one  respect  an  improve- 
ment on  the  "length  of  service"  method,  inasmuch  as  it  is 
more  equitable  to  teachers  of  varying  salary  grades.  At  the 
same  time  it  disregards  an  applicant's  length  of  service  and 

JAs  of  May,  1916.  The  low  average  is  explained  by  the  fact  that  of 
the  total  number  of  200  pensioners,  150  had  retired  before  1913,  when 
the  present  system  was  established,  and  are  receiving  retroactive  half- 
pensions  of  $75  to  $125  per  annum. 

67 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


consequently  discriminates  against  teachers  who  have  devoted 
their  energies  to  the  profession  for  exceptionally  long  terms. 
Pensions  based  on  the  scale  of  salary  in  different  systems 
are  shown  in  the  following  table. 

PENSIONS  BASED  ON  SALARY  SCALE 


PENSION 
SYSTEM 

Proportion 
of 
Salary 
Granted 

AMOUNT  OF 
PENSION 

MINIMUM  RETIRE- 
MENT CONDITIONS 

Average 
PENSION 

Mini- 
mum 

Maxi- 
mum 

Years 
of 
Service 

Age 

New     York 
(State) 
New    Jersey 
(State  Pen- 
sion) * 
New    Jersey 
Retirement 
Fund* 

Virginia.  .  .  . 

Yz  last  5  years' 
average   salary 
%  last  5  years' 
average  salary 

60  per  cent  last 
5  years'  aver- 
age salary 

%  last  5  years' 
average  salary 

Y?,  final  salary  .  . 
Yz  last  5  years' 
average  salary 
Yz  final  salary  .  .  . 

^  last  5  years' 
average  salary 

None 
None 

$250 

None 

$400 
360 

None 
$300 

$600 
None 

$650 

500 

1000 
600 

800 
600 

25 
35 

20 
(proof 
of  in- 
capacity) 
30 

30 
40 

30 

(35  for 
men) 
30  or 

60 

50 
(58  for 
men) 
50 

65 

$270.03  « 
542.00  • 

467.00* 

449.00  5 
425.90  6 

Philadelphia  . 
Baltimore  .  .  . 

Buffalo  

New  Orleans. 

JAs  of  January,  1916;  includes  disability  pensions. 

'It  is  interesting  to  note  that  a  teacher  in  New  Jersey,  who  proves  to 
the  board  of  trustees  of  the  retirement  fund  that  he  has  become  incapaci- 
tated, may  retire  on  an  annuity  of  60  per  cent  of  the  average  salary  of 
the  last  five  years.  If  he  has  completed  35  years  of  service  he  may  also 
receive  from  the  state  a  pension  of  50  per  cent  of  his  average  salary.  The 
combined  benefit  from  the  two  sources  frequently  totals  no  per  cent 
(max.  $650;  min.  $250)  of  salary.  A  retirement  income  larger  than  the 
compensation  for  active  service  is  unprecedented  in  the  history  of  re- 
tirement systems.  It  offers  a  substantial  inducement  to  retire  immediately 
upon  the  completion  of  the  thirty-fifth  year  of  service,  a  temptation  which 
few,  if  any,  teachers  are  able  to  resist.  It  adds  to  the  difficulties  of  safe- 
guarding the  pension  system  and  the  retirement  fund. 

'As  of  June  30,  1915. 

4As  of  June  30,  1916;  the  average  of  new  annuities  granted  during 
1916  was  $546. 

"As  of  December  31,  1916;  includes  disability  pensions  of  less  than. 
$400  per  annum. 

'As  of  August  31,  1915;  excludes  disability  pensions. 

68 


SUPERANNUATION  BENEFITS 


Amount  Determined  by  both  Length  of  Service  and 
Salary.  The  method  of  graduating  retirement  allowances  to 
accord  with  length  of  service  and  rate  of  compensation  is  free 
from  the  disadvantages  resulting  from  the  grant  of  "flat," 
"length  of  service"  and  "rate  of  pay"  pensions  described  in 
the  preceding  paragraphs.  It  is  obviously  just  to  grant  to  a 
teacher  who  has  served  for  a  long  term  of  years  a  higher 
benefit  than  to  one  who  has  retired  at  the  first  opportunity. 
The  practical  advantage  is  in  the  incentive  to  the  individual 
to  continue  in  service.  It  is  also  apparent  that  a  pension, 
reflecting  an  applicant's  rate  of  compensation  and,  therefore, 
conforming  to  his  standard  of  living,  affords  an  especially 
effective  means  of  releasing  from  service  the  incumbents  of 
the  higher  positions. 

Few  systems  in  this  country  have  adopted  this  method. 
Of  the  twenty-four  systems  analyzed,  only  the  system  of 
Michigan  and  the  Boston  Permanent  Fund  provide  "gradu- 
ated pensions,"  the  detailed  provisions  being  as  follows : 

PENSIONS  GRADUATED  ACCORDING  TO  LENGTH  OF  SERVICE  AND  SALARY 


AMOUNT  OF 

MINIMUM  RETIRE- 

Proportion of 

PENSION 

MENT  CONDITIONS 

Salary 

Average 

PENSION 

Granted 

Pension 

SYSTEM 

for  Each 

Mini- 

Maxi- 

Years 

Year  of 

mum 

mum 

of 

Age 

Service 

Service 

Michigan...  . 

1/60   of   last   5 

$250 

$500 

25 

years'   average 

salary 

Boston  Per- 

1/90 of  final  sal- 

104 

600 

10 

65 

$339.67' 

manent  Fund 

ary 

The  period  of  automatic  increases  in  the  pension  of  a  Michi- 
gan teacher  is  restricted  to  five  years.  An  allowance  of 
twenty-five-sixtieths  of  the  last  five  years'  average  salary  is 
granted  after  a  minimum  of  25  years  of  service.  This  allow- 

JAs  of  January  31,  1916.    Average  includes  disability  pensions. 

69 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ance  increases  by  one-sixtieth  of  salary  for  each  additional 
year  of  delay  in  retirement,  until  a  maximum  pension  benefit 
of  thirty-sixtieths  or  one-half  of  salary  is  paid  to  teachers 
retiring  after  a  total  service  of  30  or  more  years. 

The  data  shown  in  the  statement  for  Boston  teachers  refer 
to  the  Permanent  School  Pension  Fund  entirely  supported  by 
the  city.  The  free  pension  amounts  to  one-ninetieth  of  the 
final  salary  for  each  year  of  service  and  varies  from  ten- 
ninetieths  to  thirty-ninetieths  of  such  salary  granted  after 
30  or  more  years  of  service.  It  is  generally  supplemented 
by  an  annuity  from  the  Retirement  Fund  Association,  which 
is  financed  entirely  by  the  teachers.  The  annuity  amounted 
originally  to  $180,  but,  owing  to  shortage  in  funds,  has 
recently  been  reduced  to  $120.  The  combination  of  free 
pension  and  annuity  results  in  a  total  allowance  of  about  one- 
half  of  the  final  salary  of  the  rank  and  file  teacher.  It 
amounted  to  $471.67,  on  the  average,  in  January,  1916,  $132 
being  the  annuity  and  $339.67  the  average  free  pension  granted 
by  the  city. 

Combined  Benefit,  Annuity  and  Pension,  Dependent  on 
Contributions,  Age,  Length  of  Service  and  Salary.  The  new- 
est method  divides  the  benefit  into  two  elements :  the  annuity 
and  the  pension.  It  fixes  the  first  in  accordance  with  the  con- 
tributions and  age  of  the  members  at  the  time  of  retirement, 
indirectly  reflecting  their  length  of  service  and  salary.  It 
makes  the  second  either  equal  to  the  annuity  (Massachusetts 
and  Connecticut)  or  directly  proportionate  to  length  of  ser- 
vice and  salary  (New  York  City  and  Pennsylvania). 

In  Massachusetts  and  Connecticut  each  teacher  contributes 
5  per  cent  of  his  salary,  irrespective  of  age  at  entrance  into 
the  service,  until  he  reaches  the  age  of  60  years,  when  his 
contributions  cease.  If  the  teacher  elects  to  retire  at  once, 
he  is  granted  the  annuity  purchased  by  the  total  amount  of 
his  individual  contributions,  with  accumulations  of  interest. 

70 


SUPERANNUATION  BENEFITS 

To  this  annuity  is  then  added  a  free  state  pension  of  equal 
amount.  If  the  teacher  postpones  retirement,  his  annuity 
increases  with  each  year's  delay,  owing  to  the  reduction  in 
probable  life  term.  For  instance,  if  a  teacher's  contributions 
are  sufficient  to  purchase  an  annuity  of  $500  when  he  is  60 
years  old,  the  same  contributions,  left  to  accumulate  at  interest 
for  an  additional  ten-year  period,  will  pay  for  an  annuity  of 
about  $750,  if  the  teacher  retires  upon  reaching  the  maximum 
age  limit  of  70  years.  Owing  to  the  fact  that  teachers  pay 
in  the  same  percentage  of  salary,  the  total  allowance,  annuity 
plus  pension,  increases  with  length  of  service  and  rate  of  pay 
of  the  retiring  teacher.  The  adequacy  of  such  an  auto- 
matically determined  allowance  depends,  however,  on  an  addi- 
tional factor,  namely,  the  age  at  which  the  teacher  enters  the 
service,  and  the  consequent  number  and  amount  of  his  con- 
tributions before  retirement.  The  allowance  to  which  a  late 
entrant  becomes  entitled  is  apt  to  be  insufficient  to  maintain 
him  in  a  position  approximating  that  which  he  enjoyed  before 
retirement.  To  illustrate,  a  teacher  entering  the  service  at 
45  and  contributing  annually  $75,  5  per  cent  of  a  salary  of 
$1500,  until  he  reaches  60  would  accumulate  $1410.61,  in- 
clusive of  interest.  This  amount  would  purchase  at  that  age 
an  annuity  of  $132.32.  In  addition  to  this  annuity  the  teacher 
would  receive  from  the  state  a  pension  of  the  same  amount. 
The  combined  benefit,  which  would  total  $264.64  or  about 
one-sixth  of  his  salary,  could  scarcely  be  called  an  adequate 
means  of  support. 

The  impracticability  of  the  accumulations  of  flat  rate  assess- 
ments determining  the  benefits  is  thus  demonstrated.  It  em- 
phasizes the  advantage  of  first  settling  upon  an  adequate  scale 
of  benefits  and  then  calculating  the  contributions  required 
from  teachers  of  various  ages  at  entrance  into  the  service  to 
produce  such  benefits. 

71 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  new  systems  of  New  York  City  and  Pennsylvania  are 
based  upon  such  a  procedure  and  thereby  avoid  the  defects 
of  the  Massachusetts  and  Connecticut  systems.  The  contri- 
butions of  each  teacher  are  fixed  in  accordance  with  his  age  at 
the  time  he  begins  contributing  and  according  to  the  number 
of  years  of  prior  service.  They  are  fixed  in  such  a  way  as 
to  purchase  at  a  certain  age  and  under  average  conditions 
of  advancement  an  "annuity"  which,  together  with  the  city's 
"pension,"  will  equal  one-half  of  the  teacher's  average  salary 
of  the  last  ten  years.  If  the  teacher  advances  more  rapidly 
than  the  average,  his  combined  benefit  will  be  somewhat  less 
than  half-pay;  on  the  other  hand,  if  he  advances  less  rapidly, 
it  will  amount  to  more  than  half -pay.  If  he  remains  in  the 
service  beyond  the  superannuation  age,  his  annuity  will  in- 
crease and  the  total  benefit  will  exceed  half -pay.  The  "pen- 
sion" is  always  fixed  as  a  certain  proportion  of  the  teacher's 
salary  and  increases  with  each  year  of  service  up  to  35  years, 
when  it  ceases  to  increase. 

The  advantage  of  this  method  lies  in  the  fact  that  it 
reflects  the  differences  between  individual  cases  with  regard 
to  six  important  factors,  length  of  service,  salary,  rate  of 
advancement,  amount  contributed  by  the  employee,  his  age 
at  the  time  of  entering  the  service,  and  also  his  age  at  the 
time  of  retirement.  It  offers  an  inducement  to  a  teacher  to 
remain  in  the  service  after  he  has  completed  the  minimum 
requirements  and  until  he  feels  that  he  has  become  incapaci- 
tated; and  it  is  equitable,  for  it  does  not  tax  one  group  of 
beneficiaries  in  favor  of  another. 

Further  development  of  the  pension  movement  will  prob- 
ably result  in  the  introduction  of  still  more  ingenious  methods. 

Provisions  for  Minimum  and  Maximum  Pensions.  The 
sufficiency  of  a  retirement  allowance  to  support  a  beneficiary 
in  reasonable  comfort  is  an  important  consideration.  Inade- 
quate pensions,  i.  e.,  amounts  insufficient  to  maintain  a  pen- 

72 


SUPERANNUATION  BENEFITS 

sioner,  are  ineffective  as  a  means  of  releasing  the  superannu- 
ated from  service  and,  therefore,  fail  to  solve  the  problem. 
The  scale  of  benefits  in  a  pension  system  is  fixed  with  a  view 
to  providing  an  adequate  financial  protection  to  the  majority 
of  its  beneficiaries.  As  stated  in  an  earlier  section,  a  pension 
of  approximately  one-half  of  the  active  salary  is  usually 
granted  to  the  typical  or  average  teacher.  In  exceptional 
cases,  however,  the  application  of  general  rules  results  in  the 
grant  of  allowances  below  a  subsistence  level.  To  avoid  this 
minimum  pension  restrictions  are  usually  adopted.  In  systems 
which  graduate  pensions  according  to  length  of  service,  those 
entering  late  in  life  and  becoming  superannuated  after  a  short 
period  of  teaching  are  affected.  In  plans  where  benefits  are 
based  on  a  fixed  proportion  of  salary,  the  minimum  limita- 
tion protects  the  interests  of  teachers  receiving  exceptionally 
low  pay,  as  is  the  case  especially  in  rural  districts  and  in  the 
Southern  states. 

No  attempts  have  been  made  in  existing  systems  carefully 
to  ascertain  what  minimum  benefit  will  be  sufficient  from  the 
point  of  view  of  the  economic  needs  of  the  teacher  and  the 
effectiveness  of  the  system.  While  the  purpose  seems  gen- 
erally to  fix  an  amount  sufficient  to  shield  the  pensioner  from 
actual  want,  the  amount  is  usually  arbitrarily  determined 
and  varies  considerably  in  different  systems,  as  shown  in  the 
table  below.  Together  with  the  minimum  pension  the  table 
below  presents  the  average  annual  salaries.  It  must  be  borne 
in  mind  that  the  average  salaries  of  teachers  who  become 
eligible  to  retire  on  demand  or  because  of  superannuation  are 
considerably  higher  than  the  averages  shown  in  the  statement, 
which  include  the  salaries  of  large  numbers  of  young  teachers 
of  the  lower,  initial  salary  grades.  For  instance,  the  average 
given  for  all  New  York  City  teachers  is  $1197.00,  while  the 
lowest  salary,  with  enough  service  to  its  credit  for  superannu- 
ation retirement,  is  $1500.00. 

73 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 
MINIMUM  PENSION  PROVISIONS 


PENSION  SYSTEM 

Minimum 
Pension 

Average 
Annual 
Salary 
1912-1913 

Massachusetts  

None  l 

$   657.00 

Connecticut  

« 

Pennsylvania  

a 

Denver  

u 

New  York  State  

%  salary 

935.70 

New  Jersey  State  Pension  

%  salary 

] 

New  Jersey  Retirement  Fund  

60  per  cent 

Virginia  

salary 
min.  $250 
\4  salary 

>       878.75  2 
307.17 

Buffalo  

}/2  salary 

932.50 

Maine  

$150  3 

Boston  Permanent  Fund,  

312  4 

1 

Boston  Teachers'  Fund,  

120 

>     1,001.00 

Michigan  

250 

519.52 

New  Orleans  

300 

655.00 

Wisconsin  

312.50 

622.86 

Minnesota  

350 

459.57 

Baltimore  

360 

745.61 

Cleveland  

375 

Philadelphia  

400 

861.00 

Illinois  

400 

662.07 

Chicago  

400 

1,034.00 

California  

500 

1,153.00 

Pittsburgh  

500 

1,031.38 

New  York  City  

None 

1,197.00 

Differences  in  the  cost  of  living  between  various  parts  of 
the  country  and  particularly  between  cities  and  rural  districts 
of  a  state  must  be  considered  when  comparison  is  made  of 
the  minimum  pensions  just  presented.  Attention  is  called  to 
the  fact  that  among  the  first  fourteen  plans  presented,  show- 
ing minimum  pensions  of  $350  and  less,  eight  are  state  sys- 
tems, which  in  large  part  are  applicable  to  teachers  of  rural 
districts  where  the  cost  of  living  and  salaries  are  low.  On 

1A  minimum  of  $300  is  applicable  only  to  teachers  who  were  in  the 
service  on  July  i,  1914. 

*In  1915,  according  to  Mr.  Fackler's  Report  on  the  Teachers'  Retire- 
ment Fund. 

'The  minimum  pension  retroactively  granted  to  those  who  retired  be- 
fore the  establishment  of  the  present  system  in  1913  is  $75. 

'One-ninetieth  of  salary  for  each  year  of  service;  min.  $312  after  30 
years  of  service;  min.  $104  below  30  years. 

74 


SUPERANNUATION  BENEFITS 

the  other  hand,  the  eight  systems  last  mentioned,  with  mini- 
mum limitations  of  $360  and  above,  operate,  with  two  excep- 
tions, in  the  larger  cities  and  apply  to  teachers  with  relatively 
high  rates  of  compensation. 

Maximum  Pension.  A  certain  proportion  of  salary  is 
frequently  established  as  a  maximum  limitation  on  pensions. 
Such  a  limitation  bears  equally  on  all  employees.  In  this 
country  one-half  of  the  salary  is  generally  the  highest  pension 
granted.  If  pensions  are  graduated  according  to  length  of 
service  or  compensation,  or  depend  on  both  conditions,  the 
variations  in  amount  are  below  the  half-pay  level. 

In  many  systems,  however,  the  maximum  is  expressed  as 
a  fixed  amount  and  in  such  cases  affects  the  retirement  of 
only  the  higher  salaried  employees  by  restricting  their  benefits 
to  a  smaller  proportion  of  salary  than  is  granted  to  the  rank 
and  file. 

The  maximum  limit  may  present  the  advantage  of  pre- 
venting extravagant  pensions  and  "excessive  protection,"  but 
it  also  presents  the  disadvantage  of  not  placing  the  authori- 
ties in  a  sufficiently  strong  position  to  retire  superannuated 
higher  salaried  teachers  and  supervisors.  Its  effect  depends 
on  how  the  maximum  is  fixed. 

An  examination  of  maximum  limits  adopted  in  existing 
systems  reveals  the  fact  that  they  have  been  fixed  arbitrarily 
and  at  such  a  low  level  as  to  injure  the  efficiency  of  the 
schools.  The  teachers  on  whose  initiative  the  systems  have 
been  established  have  not  given  due  consideration  to  school 
efficiency.  Frequently  at  the  establishment  of  a  system  the 
school  administration  maintained  an  attitude  of  indifference 
and  failed,  as  a  consequence,  to  protect  its  own  interests. 
Under  such  circumstances  the  majority  of  teachers  of  a  sys- 
tem have  a  predominant  voice  in  the  determination  of  retire- 
ment conditions.  Receiving  low  or  medium  salaries  they 
object  to  their  superiors  drawing  substantially  larger  benefits 
than  their  own.  The  majority  of  teachers  do  not  seem  to 

75 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

realize  that  their  opportunities  for  advancement  are  lessened 
by  the  reluctance  of  those  in  higher  positions  to  retire  on  a 
fractional  part  of  their  salaries.  Those  who  argue  that  high 
salaries  place  their  recipients  in  a  better  position  (to 
protect  themselves  on  their  own  volition  against  the  con- 
tingency of  old  age  seem  to  overlook  one  of  the  most  im- 
portant conditions  which  has  caused  the  spread  of  the  pension 
idea.  Pensions  are  provided  not  only  because  of  the  economic 
inability  of  the  individual  to  make  protective  financial  arrange- 
ments, but  also  because  of  his  failure  to  anticipate  early 
enough  the  possibility  of  future  risks  and  his  tendency  to 
live  up  to  his  entire  income.  This  explains  why  pensions  are 
provided  not  only  for  poorly  paid  laborers,  but  also  for  college 
professors  whose  salaries  are  above  the  mere  subsistence  level. 
The  maximum  restrictions  are  also  urged  as  a  substantial 
saving  in  cost.  It  must  be  remembered,  however,  that  they 
apply  to  a  relatively  small  proportion  of  a  teaching  force. 
The  incumbents  of  the  higher  positions,  moreover,  have  gen- 
erally a  tendency  to  remain  in  service  much  later  in  life  than 
the  average  teacher.  Retiring  at  advanced  ages,  their  pen- 
sions, due  to  the  small  number  of  probable  payments,  cost 
relatively  less  than  benefits  of  like  amounts  granted  to  the 
earlier  retiring  classroom  teachers.  Owing  to  these  conditions 
the  total  saving  which  may  be  effected  by  maximum  restric- 
tions of  the  usual  type  generally  amounts  to  but  a  fractional 
part  of  the  total  liabilities  of  a  pension  system. 


SUPERANNUATION  BENEFITS 

\  • 

MAXIMUM  PENSION  PROVISIONS 


PENSION  SYSTEM 

Maximum 
Pension 

Average 
Annual 
Salary 
1912-1913 

Maine  

$250 

$   392.98 

Illinois  

400 

662.07 

Chicago  

400 

1,034.00 

Wisconsin  

450 

622.86 

Cleveland  

450 

Denver  

480 

Minneapolis  

500 

459.57 

California  

500 

1,153.00 

Virginia  

500  i 

307.17 

Michigan  

500" 

519.52 

Pittsburgh  

500 

1,031.38 

New  York  State  

600  » 

935.70 

Baltimore  

600  i 

745.61 

New  Orleans  

600  i 

655.00 

Boston  Permanent  Fund  

600* 

Boston  Teachers'  Fund  

132 

>    1,001.00 

Buffalo  

800  i 

932.50 

Philadelphia  

1.000  i 

861.00 

Massachusetts  

1,000s 

667.00 

New  York  City  

None 

1,197.00 

New  Jersey  State  Pension  

%  salary 

935.70 

New  Jersey  Retirement  Fund  

$650* 

'Pension  also  limited  to  one-half  of  salary. 
"Pension  also  limited  to  one-third  of  salary. 

*At  age  sixty,  allowance  automatically  increases  to  about  $1,500  if  re- 
tirement is  postponed  until  age  70. 

'Pension  also  limited  to  60  per  cent  of  salary. 


77 


CHAPTER  IV 
DISABILITY  BENEFITS 

The  release  of  teachers  from  active  service  because  of  dis- 
ease or  illness  before  they  have  complied  with  the  regulations 
for  superannuation  retirement  is  a  particularly  difficult  phase 
of  the  pension  problem.  The  establishment  of  disability  fea- 
tures is  necessary  to  school  efficiency,  because  the  presence 
in  the  classroom  of  a  sick  teacher  is  as  unjust  to  the  children 
as  is  the  presence  of  one  incapacitated  because  of  old  age. 
The  suffering  which  is  caused  by  cases  of  early  disability  is 
pitiable  and  makes  a  strong  appeal  to  human  sympathy.  The 
appeal  is  strengthened  by  the  consideration  that  there  is  no 
adequate  insurance  against  disability  available  to  the  teacher 
within  his  means,  and  that  on  the  other  hand  his  savings,  if 
any,  during  a  generally  short  period  of  service  are  insufficient 
to  provide  satisfactory  relief.  As  a  result,  where  disability 
provisions  are  lacking,  the  sick  teacher  continues  to  teach 
longer  than  is  good  either  for  himself  or  the  school,  or  else 
administrative  authorities  are  tempted  to  an  overliberal  inter- 
pretation of  rules  for  sick  leave  with  pay,  which  is  an  ex- 
pensive and  unsatisfactory  substitute  for  disability  pensions. 

Due  to  the  comparatively  infrequent  occurrence  of  bona  fide 
disability  the  contingency  is  one  which  may  be  guarded  against 
through  cooperative  effort.  The  cost  of  moderate  disability 
provisions  is  slight  as  compared  with  the  cost  of  superannua- 
tion pensions,  if  sufficient  care  is  taken  to  safeguard  them 
against  unwarranted  use. 

To  establish  proper  safeguards,  however,  is  a  real  diffi- 
culty. For  the  protection  of  all  concerned,  those  entering  the 

78 


DISABILITY  BENEFITS 

service  must  be  required  to  be  in  good  physical  condition. 
The  grant  of  a  disability  pension  must  be  preceded  by  a 
reliable  examination  of  the  applicant  and  must  be  followed 
by  periodical  reexaminations  to  test  the  continuance  of  the 
disabling  disease  or  illness.  On  the  thoroughness  of  these 
protective  measures  depends  the  beneficial  effect  of  disability 
features  as  well  as  their  cost. 

Conditions  under  which  Disability  Benefits  are  Pro- 
vided. Although  the  majority  of  existing  pension  systems 
include  provisions  for  the  retirement  of  disabled  teachers,  the 
scope  and  nature  of  the  rules  clearly  indicate  that  the  dis- 
ability problem  has  not  been  given  adequate  consideration. 
Of  the  twenty-four  systems  subjected  to  detailed  study,  two, 
one  operating  in  the  state  of  Maine  and  the  other  in  the  city 
of  Pittsburgh,  entirely  disregard  the  existence  of  the  disability 
problem.  The  new  system  of  Connecticut  started  without  a 
disability  provision.1  The  rules  of  twenty  systems  take  cogni- 
zance of  disability  only  after  varying  periods  of  service. 

The  risk  of  disability,  it  must  be  remembered,  is  ever  pres- 
ent, and  release  from  active  duty  is  desirable,  irrespective 
of  the  number  of  years  the  disabled  teacher  may  have  taught. 
This  makes  the  absence  of  provisions,  during  the  first  years 
of  service  when  the  teacher  is  least  prepared  financially  to  take 
care  of  the  contingency  of  disability,  most  regrettable.  The 
omission  is  not  warranted  by  considerations  of  cost,  which 
is  relatively  small  because  of  the  infrequency  of  cases  of 
disability  among  the  younger  and  generally  healthy  teachers. 
It  is  probably  due  to  difficulties  in  properly  safeguarding  the 
grant  of  disability  pensions  that  they  are  not  provided  in 
existing  systems  until  the  teachers  have  to  their  credit  certain 
minimum  terms  of  service. 

As  in  connection  with  superannuation  benefits,  applicants 
for  disability  pensions  are  credited  in  many  plans  with  a  cer- 


New  Jersey  35-year  Service  Pension  does  not  contain  a  disability 
clause,  but  the  New  Jersey  Teachers'  Retirement  Fund  supplements  it 
with  a  disability  provision. 

79 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


tain  proportion  of  their  service  outside  the  jurisdiction  of 
the  educational  system  from  which  they  seek  retirement.   The 

CONDITIONS  UNDER  WHICH  DISABILITY  BENEFITS  ARE  PROVIDED 


PENSION  SYSTEM 

MINIMUM  YEARS  OF  SERVICE  ENTITLING  TO 
DISABILITY  PENSION 

Total 

Within 
Jurisdiction 
of 
Retiring 
System 

Credtied 
for 
"Outside" 
Ex- 
perience 

Slates: 
1.  Pennsylvania  

10 
15 

15 

20 

10 
6 
9 

20 

No  disability  provision 
20 
10 
18 
15 
20 
15 
No  disability  provision 

10 
9 
5 
10 

10 

2 

No  disability  provision 
20 
16 
(20  for  men) 

5 

10 

'9 
6 

None 

None 
5 
None 

« 
« 
« 

None 
6 
None 
10 

None 

« 

None 
4 
(5  for 
men) 

None 
a 

2.  Illinois  

3.  New  York  

4.  New  Jersey  Retirement 
Fund  

5.  New  Jersey  State  Pen- 
sion   

6.  Massachusetts  

20 

15 
18 
15 
20 
15 

7.  Minnesota  

8.  Wisconsin  

9.  California  

10.  Virginia  

11.  Michigan  

12.  Maine  

13.  Connecticut  

Cities; 
1.  New  York  City  

10 
15 
5 
20 

10 
2 

2.  Chicago  

3.  Philadelphia  

4.  Cleveland  

5.  Boston  Permanent 
Fund  

6.  Boston  Retirement 
Fund  

7.  Pittsburgh  

8.  Baltimore  

20 
20 
(25  for 
men) 
5 
10 

9.  Buffalo  

10.  New  Orleans  

11.  Denver.  . 

minimum  service  restrictions  in  the  twenty-four  systems  under 
consideration  are  shown  in  the  table  above. 

Amount  of  Disability  Benefits.     The  principal  points  dis- 
cussed in  a  preceding  chapter  regarding  the  amount  of  super- 

80 


DISABILITY  BENEFITS 

annuation  pensions  apply  with  equal  force  to  disability  allow- 
ances and  need  not  be  repeated.  It  is  important,  however, 
to  emphasize  the  desirability  of  scaling  disability  benefits 
(granted  after  relatively  short  periods  of  service)  below  the 
amounts  which  are  available  to  superannuated  teachers.  This 
is  required  not  only  by  considerations  of  equity  but  as  an  im- 
portant protection  to  disability  reserves  against  abuse  by 
teachers,  who  allege  disability  merely  because  they  wish  to 
be  pensioned  earlier  than  is  permitted  under  the  stricter  pro- 
visions for  retirement.  If,  for  instance,  the  disability  benefit 
after  10  years  of  service  is  equal  to  the  superannuation  pen- 
sion granted  after  30  years  of  service,  the  incentive  for  early 
disability  retirement  may,  in  certain  circumstances,  such  as 
impending  marriage,  or  change  of  residence  or  occupation, 
prove  so  strong  as  to  overcome  the  customary  safeguard  of  a 
medical  diagnosis,  never  infallible  at  best. 

The  importance  of  keeping  disability  benefits  below  the 
level  of  superannuation  pensions  has  been  recognized  in  all 
but  three  of  the  foregoing  twenty  systems  which  have  disability 
features.  These  include  the  systems  of  Virginia  and  Buffalo, 
which  provide  half-pay  pensions  irrespective  of  length  of 
service  or  cause  of  retirement.  The  New  Jersey  Teachers' 
Retirement  Fund  grants  60  per  cent  of  salary  to  those  dis- 
abled after  20  or  more  years  of  teaching.  It  must  be  observed, 
however,  that  the  incentive  to  retire  soon  after  having  taught 
20  years  gradually  disappears  as  the  teacher  continues  to 
serve,  since  the  state  pension  system  supplements  the  disability 
annuity  by  a  straight  pension  of  50  per  cent  of  salary,  if  a 
teacher  has  had  35  years  of  service.1 

The  extent  to  which  disability  benefits  may  be  reduced  has 
its  limitations;  as  the  subsistence  level  is  reached  a  minimum 
restriction  becomes  necessary.  Such  limitations  have  been 
generally  provided,  the  commonly  established  minimum  pen- 

1The  new  law  enacted  in  New  Jersey  on  April  10,  1919,  and  discussed 
in  Chapter  XVIII,  abolished  this  double  system. 

81 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

sions  varying  as  a  rule  between  $200  and  $250.  There  are, 
however,  a  number  of  systems  which  have  no  minimum 
restrictions  and  grant  pensions  after  short  periods  of  service 
of  such  small  amounts  that  they  are  apt  to  place  the  bene- 
ficiary in  the  predicament  of  not  having  enough  to  live  on 
and  too  much  to  prevent  his  dying. 

The  twenty  systems  which  include  disability  provisions 
have  a  bewildering  variety  of  regulations  for  the  determina- 
tion of  the  amount  of  pension.  In  the  table  on  the  page  opposite 
these  have  been  arranged  in  the  ascending  order  of  their  mini- 
mum pension  amounts. 

Medical  Examinations  and  Reexarninations.  Provisions 
for  the  retirement  of  disabled  teachers  are  a  part  of  the  gen- 
eral subject  relating  to  the  health  condition  of  the  teaching 
personnel,  some  phases  of  which  are  not  customarily  con- 
sidered in  connection  with  the  pension  problem,  although 
closely  related  to  it. 

First  of  all  the  recruiting  of  the  personnel  must  be  con- 
sidered. Though  teaching  does  not  involve  special  physical 
hardship  or  exposure  to  inclement  weather,  it  imposes  con- 
siderable strain  on  the  nervous  system  of  the  teacher,  because 
he  is  required  to  exercise  constantly  and  to  an  unusual  degree 
patience  and  self-control.  It  is  important,  therefore,  to  sub- 
ject applicants  for  teachers'  positions  to  a  thorough  medical 
examination,  especially  of  the  nervous  system,  to  insure  that 
only  those  enter  the  service  who  are  able  to  withstand  the 
mental  strain  which  is  inevitably  imposed  by  classroom  work. 
These  entrance  tests  are  of  special  importance  where  dis- 
ability benefits  are  available  immediately  upon  entrance  or 
after  a  few  years  of  service.  It  is  a  safeguard  against  dis- 
eased individuals  entering  the  profession  for  the  sole  purpose 
of  claiming  a  disability  allowance.  Medical  examinations  are 
required  by  the  entrance  regulations  of  the  majority  of  edu- 
cational systems.  As  a  rule,  however,  they  are  superficially 
made  and  cannot  compare  in  thoroughness  with  the  medical 

82 


DISABILITY  BENEFITS 


AMOUNT  OF  DISABILITY  BENEFITS 


Pension  System 

Minimum 
Service 
for  Dis- 
ability 
Retire- 
ment 

Scale  of  Pension 

Minimum  Pension 

Massachusetts  
Pennsylvania  

20 

10 

"Annuity"  plus  "pension"  of 
1/30  of  superannuation  pen- 
sion for  each  year  of  service 
1/90  of  salary  for  each  year  of 

30  per  cent  of 

New  Orleans  

5 

service 
1/80  of  salary  for  each  year  of 

salary 
6.25  per  cent  of 

Philadelphia  

5 

service 
1/60  of  salary  for  each  year  of 

salary  and  $50 
8.33  per  cent  of 

New  York  City  
Michigan  

10 
15 

service 

20  per  cent  of  salary  plus  an- 
nuity 
1/60  of  salary  for  each  year  of 

salary  and 
$66.67 
20  per  cent  of 
salary 
25  per  cent  of 

Baltimore   

20 

service 
1/80  of  salary  for  each  year  of 

salary 
25  per  cent  of 

New  York  State.  .  . 
Chicago  

15 
15 

service 
1/50  of  salary  for  each  year  of 
service 
$133.33  for  15  years'  service, 

salary 
30  per  cent  of 
salary 
$133.33 

Denver  

10 

increased  by  $26.67  annually 
$19  20  for  each  year  of  service 

$192.00 

Wisconsin  

18 

$12.50  for  each  year  of  service 

$225.00 

Boston  Retirement 
Fund 

2 

$132.00  

$132.00 

Boston  Permanent 
Fund 

Illinois  

10 
15 

1/90  of  salary  for  each  year 
of  service 
$16  for  each  year  of  service  .  .  . 

$104.00 
$240.00 

California  

15 

$16.67  for  each  year  of  service 

$250.00 

Cleveland  

20 

$12.50  for  each  year  of  service 

$250.00 

Virginia  

20 

50  per  cent  of  salary  

50  per  cent  of 

Buffalo  

20 

50  per  cent  of  salary  

salary 
50  per  cent  of 

New  Jersey  Retire- 
ment Fund 

(25  for 
men) 

20 

60  per  cent  of  salary  

salary 
60  per  cent  of 

Minnesota  

15 

$17.50  for  each  year  of  service 

salary  and  $250 
$262.50 

TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

tests  to  which  applicants  for  policies  are  subjected  by  life 
insurance  companies. 

The  health  of  teachers  in  active  service  is  the  next  im- 
portant question.  It  involves  the  consideration  of  all  condi- 
tions under  which  the  teacher  must  labor,  including  sanitation 
of  school  buildings,  supervision  of  the  health  of  school  chil- 
dren with  whom  the  teachers  are  in  daily  contact,  and  other 
measures.  Of  more  direct  bearing  on  the  pension  problem, 
however,  are  existing  regulations  relating  to  the  absence  of 
teachers  from  duty  on  account  of  ill  health.  The  payment 
of  full  or  reduced  salary  during  leave  of  absence,  especially 
of  long  duration,  is  in  the  nature  of  a  temporary  disability 
pension.  If  such  leaves  are  granted  judicially,  they  produce  a 
beneficial  effect  on  the  service  and  tend  to  lessen  the  number 
of  permanent  disability  retirements.  The  machinery  for  the 
administration  of  sick  leave  regulations  serves  also  as  an 
important  check  on  the  health  condition  of  individual  teachers, 
and  facilitates  the  compulsory  retirement  of  sick  teachers  on 
disability  allowances. 

A  thorough  medical  examination  of  a  teacher  who  is  to  be 
retired  because  of  accident  or  disease  is  the  most  important 
safeguard  for  the  disability  features  of  a  pension  system. 
For  obvious  reasons  it  would  appear  unwise  to  use  the  certifi- 
cate of  an  applicant's  private  physician  as  a  sufficient  basis 
for  the  grant  of  a  disability  benefit.  To  insure  reliable  reports 
it  is  important  that  medical  examinations  be  made  by  physi- 
cians under  the  pensioning  authority.  Because  of  their 
familiarity  with  the  demands  of  the  teaching  profession,  such 
physicians  are  in  a  much  better  position  than  private  prac- 
titioners to  determine  whether  or  not  a  teacher  is  unfitted 
for  the  work  of  a  classroom.  It  is  also  desirable  that  the 
official  medical  examiners  be  specialists  on  nervous  diseases, 
which  are  the  principal  cause  of  breakdown  among  women 
teachers. 

A  review  of  the  rules  of  the  twenty-four  pension  systems 

84 


DISABILITY  BENEFITS 

analyzed  fails  to  disclose  thorough  methods  of  disability 
examinations  except  in  the  new  systems  of  New  York  City 
and  Massachusetts.  In  the  first  place,  the  legal  language 
relating  to  the  disability  features  is  generally  vague,  leaving 
it  to  the  discretion  of  the  pensioning  authorities  to  devise 
such  rules  as  they  may  deem  best.  Only  in  ten  systems1 
is  special  mention  made  in  the  law  with  regard  to  the  certifi- 
cation of  disability  by  physicians  of  the  various  pension 
boards.  In  other  systems  disability  pensions  may  be  granted 
on  the  basis  of  certificates  of  physicians  who  have  no  official 
connection  with  the  retirement  authorities  and  whose  fees 
come  from  the  applicant.2 

Of  no  less  importance  than  the  medical  examination  of 
applicants  for  retirement  is  the  periodical  reexamination  of 
pensioners  for  the  purpose  of  testing  the  continuance  of  dis- 
ability and  the  return  to  duty  of  those  whose  health  has  been 
restored.  The  prospect  of  such  periodical  reexaminations 
serves  also  as  an  effective  safeguard  against  unwarranted 
retirement  applications. 

The  only  system  which  makes  provision  for  systematic  com- 
pulsory reexaminations  is  the  new  system  of  New  York  City. 
In  the  systems  of  Illinois,  New  Jersey,  Minnesota,  Virginia 
and  Philadelphia,  rules  exist  for  the  termination  of  pension 
if  a  disability  pensioner  resumes  teaching.  The  practical  value 
of  such  rules,  however,  is  very  limited  as  the  return  to  duty 
is  made  on  the  initiative  of  the  teacher  and  not  as  a  result 
of  systematic  administrative  supervision  of  the  disability 
pensioners. 

Illinois,  New  Jersey,  Minnesota,  California,  Chicago,  Philadelphia,  New 
Orleans,  Massachusetts,  New  York  and  Pennsylvania. 

2This  was  the  practice  in  the  old  system  of  New  York  City.  The  new 
system  requires  the  applicant  to  be  examined  by  the  board's  physician. 


CHAPTER  V 
DEATH  AND  WITHDRAWAL  BENEFITS 

Death  Benefits.  Responsibility  for  the  support  of  others 
makes  the  carrying  of  life  insurance  one  of  the  obvious  duties 
of  the  individual.  It  is  for  this  reason  that  the  risk  of  death 
is  most  frequently  provided  against,  although  it  is  neither 
the  most  immediate  nor  the  most  expensive  risk  which  has  a 
claim  upon  the  individual's  earnings. 

Cooperative  effort  of  a  large  homogeneous  group  of  indi- 
viduals is  the  best  and  cheapest  method  by  which  the  risk  to 
the  individual  may  be  reduced.  Especially  is  this  true  of  life 
insurance  in  an  educational  system.  It  requires  relatively 
low  premiums  as  contrasted  with  those  of  insurance  com- 
panies, not  only  because  the  costs  of  soliciting  agents  and  of 
administration  are  reduced  and  the  profits  eliminated,  but 
because  the  mortality  among  teachers  is  low  as  compared  with 
that  of  the  average  of  insured  lives. 

The  opportunity  for  making  a  retirement  measure  more 
attractive  by  including  the  comparatively  inexpensive  death 
benefit  among  its  provisions  has  not  been  appreciated  in  the 
establishment  of  existing  pension  systems.  This  is  probably 
due  to  the  fact  that  the  proportion  of  men,  who  alone  are 
apt  to  be  actively  interested  in  life  insurance,  is  comparatively 
small,  comprising  in  1912-1913  only  about  20  per  cent  of  the 
total  teaching  personnel  in  the  United  States.  Death  benefits 
are  accordingly  considered  in  existing  systems  only  in  rela- 
tion to  the  propriety  of  refunding  the  accumulated  contribu- 
tions of  members. 

Nineteen  of  the  twenty-four  systems  analyzed  exact  con- 

86 


DEATH  AND  WITHDRAWAL  BENEFITS 

tributions  from  teachers.  Only  eight  systems,  however, 
operating  in  Minnesota,  Cleveland,  Baltimore,  New  Orleans, 
Massachusetts,  Connecticut^  Pennsylvania  and  New  York 
City  provide  for  refunds  in  case  of  death.  The  system  of 
New  York  City  also  provides  an  additional  death  benefit  in 
certain  cases. 

The  systems  of  Minnesota,  Cleveland,  Baltimore  and  New 
Orleans  provide  for  the  refund  in  case  of  death  of  only  one- 
half  of  the  teacher's  contributions  without  interest.  In  Minne- 
sota and  Cleveland  teachers  contribute  flat  amounts,  in  Balti- 
more and  New  Orleans  a  proportion  of  salary.  In  all  four 
systems  the  assessments  are  small  and  average  from  i  per  cent 
to  2  per  cent  of  salaries.  The  refunds  of  one-half  of  these 
assessments,  especially  without  interest,  are  consequently  in- 
sufficient. Even  after  a  long  period  of  contribution  they  are 
barely  sufficient  for  defraying  funeral  expenses  as  may  be 
seen  from  the  statement  on  the  following  page  showing  the 
refunds  payable  under  the  systems  of  Minnesota,  Cleveland 
and  Baltimore  (New  Orleans  having  a  scale  of  assessments, 
and  hence  of  refunds,  similar  to  that  of  Baltimore). 

Much  more  adequate  are  refunds  of  contributions  in  Massa- 
chusetts and  Connecticut,  where  teachers  contribute  5  per  cent 
of  salary,  and  their  entire  accumulations  with  compound 
interest  are  returned.1  The  minimum  assessment  is  $35  from 
salaries  of  $700  and  less,  and  the  maximum  $100  per  annum 
from  salaries  of  $2000  or  more.  The  accumulations  during 
the  first  years  of  service  are  too  small  to  take  the  place  of 
customary  life  insurance.  After  the  sixteenth  year,  however, 
they  exceed  one  year's  salary  and  may  be  considered  as 
adequate  death  benefits.  The  refunds  which  become  available 
at  the  end  of  each  successive  year  are  presented  on  page 
89. 

The  recently  enacted  scientific  systems  of  New  York  City 

interest  is  credited  at  such  rate  as  has  been  actually  'earned.  Four 
per  cent  was  credited  in  1916. 

87 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


REFUND  OF  ONE-HALF  OF  TEACHERS'  CONTRIBUTIONS  IN  MINNESOTA, 
CLEVELAND  AND  BALTIMORE 


YEAR 

Minnesota 

Cleveland 

Baltimore 
(Maximum 
Refunds) 

1 

$  2.50 

$10 

$  7.20 

2 

5.00 

20 

14.40 

3 

7.50 

30 

21.60 

4 

10.00 

40 

28.80 

5 

12.50 

50 

36.00 

6 

17.50 

60 

43.20 

7 

22.50 

70 

50.40 

8 

27.50 

80 

57.60 

9 

32.50 

90 

64.80 

10 

37.50 

100 

72.00 

11 

47.50 

110 

82.75 

12 

57.50 

120 

93.50 

13 

67.50 

130 

104.25 

14 

77.50 

140 

115.00 

15 

87.50 

150 

125.75 

16 

97.50 

160 

136.50 

17 

107.50 

170 

147.25 

18 

117.50 

180 

158.00 

19 

127.50 

190 

168.75 

20 

137.50 

200 

179.50 

21 

152.50 

210 

193.90 

22 

167.50 

220 

208.30 

23 

182.50 

230 

222.70 

24 

197.50 

240 

237.10 

25 

212.50 

250 

251.50 

26 

212.50 

260 

265.90 

27 

212.50 

270 

280.30 

28 

212.50 

280 

294.70 

29 

212.50 

290 

309.10 

30 

212.50 

300 

323.50 

and  Pennsylvania  provide  for  a  return  to  the  dependents  of 
a  deceased  teacher  of  all  his  contributions  together  with  com- 
pound interest  at  4  per  cent.  In  addition,  in  New  York  City, 
in  case  death  occurs  in  active  service,  after  the  teacher  is 
eligible  to  retirement,  his  dependents  receive  a  benefit  equal 
to  one-half  of  his  annual  salary.  Furthermore,  novel  features 
are  included  in  the  systems  which  considerably  improve  the 
provision  for  dependents  as  compared  with  the  provisions  in 

88 


DISABILITY  BENEFITS 


other  systems.  A  teacher  is  given  two  options :  one,  to  reduce 
his  benefit  with  a  provision  that  in  case  he  dies  before  he 
has  received  the  total  value  of  his  annuity  and  pension,  the 


AMOUNT  OF  ANNUAL  CONTRIBUTIONS  INCREASED  BY  3  PER  CENT 
COMPOUND  INTEREST 


Year 

Annual 
Assessment 
S35 

Annual 
Assessment 
$50 

Annual 
Assessment 
$75 

Annual 
Assessment 
$100 

1 

$     35.39 

$     50.56 

$     75.84 

$    101.13 

2 

71.85 

102.64 

153.96 

205.28 

3 

109.40 

156.28 

234.42 

312.57 

4 

148.07 

211.54 

317.31 

423.07 

5 

187.91 

268.44 

402.66 

536.89 

6 

228.94 

327.06 

490.59 

654.12 

7 

271.20 

387.43 

581.14 

774.87 

8 

314.73 

449.62 

674.43 

899.24 

9 

359.57 

513.67 

770.50 

1,027.34 

10 

405.75 

579.64 

869.46 

1,159.29 

11 

453.32 

647.59 

971.39 

1,295.19 

12 

502.31 

717.58 

1,076.37 

1,435.16 

13 

552.77 

789.67 

1,184.50 

1,579.35 

14 

604.75 

863.93 

1,295.89 

1,727.85 

15 

658.29 

940.41 

1,410.61 

1,880.82 

16 

713.43 

1,019.18 

1,528.77 

2,038.36 

17 

770.22 

1,100.32 

1,650.48 

2,200.64 

18 

828.72 

1,183.89 

1,775.83 

2,367.79 

19 

888.98 

1,269.97 

1,904.95 

2,539.94 

20 

951.04 

1,358.63 

2,037.94 

2,717.27 

21 

1,014.97 

1,449.96 

2,174.94 

2,899.91 

22 

1,080.81 

1,544.02 

2,316.03 

3,088.03 

23 

1,148.63 

1,640.90 

2,461.35 

3,281.80 

24 

1,218.48 

1,740.69 

2,611.03 

3,481.38 

25 

1,290.43 

1,843.47 

2,765.20 

3,686.94 

26 

1,364.54 

1,949.34 

2,924.01 

3,898.68 

27 

1,440.87 

2,058.38 

3,087.57 

4,116.76 

28 

1,519.49 

2,170.69 

3,256.03 

4,341.39 

29 

1,600.46 

2,286.38 

3,429.57 

4,572.76 

30 

1,683.87 

2,405.53 

3,608.29 

4,811.06 

balance  shall  be  paid  to  his  heirs  or  assigns;  and,  two,  to 
reduce  his  benefit  so  that  the  same  benefit  or  one-half  of  that 
benefit  shall  be  continued  throughout  life  to  his  dependents. 
The  importance  of  these  options  is  tremendous  for  they  make 

89 


TEACHERS'    PENSION    SYSTEMS    IN    THS    UNITED    STATES 

the  systems  applicable  to  individual  conditions  with  regard 
to  dependents,  and  involve  not  only  the  teachers  but  also 
the  city's  contributions.  Their  introduction  in  the  systems 
of  New  York  and  Pennsylvania  thus  furnishes  an  important 
precedent. 

Benefits  at  Resignation  or  Dismissal.  When  a  teacher 
resigns  or  is  dismissed,  before  becoming  eligible  to  pension, 
the  question  arises  as  to  his  right  to  a  proportionate  part  of 
such  pension.  In  "non-contributory"  pension  systems  this  is 
generally  denied  on  the  ground  that  pensions  are  a  reward 
for  long  and  continuous  service  which  is  of  special  value  not 
compensated  for  by  regular  wages,  and  that  it  can  only  accrue 
if  the  employee  remains  with  the  employer  during  the  entire 
working  period  of  his  life. 

In  systems  which  are  entirely  or  in  part  supported  by  con- 
tributions of  employees,  the  return  of  such  contributions  comes 
into  question.  Where  the  assessments  are  low,  they  are 
frequentl}  forfeited  on  the  theory  that  they  are  made  on  the 
straight  insurance  basis  and  that  the  teacher  has  received 
full  value  for  each  year's  payment  to  the  fund  in  the  form 
of  protection  against  superannuation  or  earlier  disability. 

Early  life  insurance  organizations  abroad  and  in  this  coun- 
try, operating  upon  the  "forfeiture"  basis,  provided  life 
annuities  to  their  surviving  members  by  means  of  the  lapses 
of  premiums  obtained  from  those  members  who  withdrew 
from  the  organization  through  death  or  otherwise.  They 
were  generally  known  under  the  term  "tontine."1  With  the 
development  of  scientific  principles  of  insurance,  laws  were 


Standard  Dictionary  defines  the  "tontine"  as  "a  form  of  life 
annuity"  and  describes  the  original  tontine  as  follows  :  "The  income  from 
the  common  fund  contributed  by  the  persons  composing  the  tontine  is 
divided  at  first  among  all,  say  100.  When  one  dies,  his  share  passes,  not 
to  his  heirs  as  part  of  his  estate,  but  to  the  99  survivors  of  the  tontine, 
and  so  on  continuously,  the  profit  increasing  to  each  survivor  as  the 
number  diminishes,  until  the  final  survivor  takes  the  whole,  and  at  his 
death  the  tontine  ceases."  The  plan  owes  its  name  to  Lorenzo  Tonti,  an 
Italian  banker  of  the  seventeenth  century. 

90 


DEATH  AND  WITHDRAWAL  BENEFITS 

enacted  in  almost  every  state  forbidding  the  operation  of 
"tontines,"  and  requiring  life  insurance  companies  to  pro- 
vide cash  surrender  benefits  to  the  policyholders  whose  policies 
were  canceled  through  non-payment  of  premiums  or  other 
cause. 

The  advantage  claimed  for  the  "forfeiture"  method  in 
connection  with  pension  systems  is  that  it  permits  the  pay- 
ment of  higher  benefits  than  could  otherwise  be  provided 
to  those  who  remain  in  the  service  for  the  prescribed  period 
and  then  retire.  The  objection  remains,  however,  that  it  is 
inequitable  in  that  it  takes  money  from  the  unfortunate  ones 
who  resign  or  are  dismissed  or  from  their  dependents  in  the 
event  of  death,  in  order  to  give  it  to  the  fortunate  few  who 
become  eligible  to  retire.  The  non-return  of  contributions 
toward  the  more  or  less  uncertain  contingencies,  such  as  death 
or  disability,  may  have  its  justifications;  but  the  forfeiture 
of  accumulations  against  dependency  in  old  age  cannot  be 
logically  defended.  If  adequate  provision  is  to  be  made 
against  this  contingency  a  certain  part  of  the  employee's 
wages  must  be  set  aside  during  the  entire  earning  period  of 
his  life.  A  teacher  leaving  a  particular  educational  system  is 
still  confronted  with  the  necessity  of  providing  for  old  age, 
which  is  the  most  expensive  and  least  uncertain  risk  he  has 
to  face.  If  he  forfeits  all  the  accumulations  he  has  made 
he  is  placed  in  a  particularly  disadvantageous  position.  He 
has  to  begin  anew  with  a  materially  increased  annual  charge 
for  the  protection  sought  because  of  the  shortening  of  the 
period  during  which  accumulations  can  be  made.  Unless, 
therefore,  the  teacher  transfers  his  services  to  another  educa- 
tional system  which  pays  non-contributory  pensions  or  credits 
"outside  experience"  for  pension  purposes,  he  is  heavily  and 
unjustly  penalized. 

This  injustice  makes  difficult  the  dismissal  of  incompetent 
employees,  since  a  superior  official  dislikes  to  cause  his  sub- 
ordinates not  only  the  loss  of  pension  but  also  the  loss  of  their 

91 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

savings.  On  the  other  hand,  the  argument  that  forfeitures 
discourage  resignations  and  stabilize  the  service  is  of  doubt- 
ful value.  Unjust  and  arbitrary  measures  may  temporarily 
accomplish  a  given  purpose ;  but  they  engender  dissatisfaction 
and  resentment,  the  effect  of  which  vitiates  the  apparent 
advantages. 

That  forfeitures  of  contributions  lead  to  dissatisfaction  is 
one  of  the  most  tangible  lessons  derived  from  a  study  of 
pension  history.  Pension  systems  abroad  which  have  been 
long  enough  in  existence  to  furnish  such  lessons  had  to  modify 
their  purely  routine  provisions  to  conform  to  principles  of 
equity  and  justice.  As  a  result,  the  return  of  employees' 
contributions  with  accumulations  of  interest  is  a  rule  which 
finds  very  few  exceptions  in  foreign  contributory  retirement 
plans.  Non-contributory  pension  systems  have  resorted  to 
the  somewhat  awkward  and  expensive  alternatives  in  the  form 
of  lump  sum  gratuities  or  compassionate  allowances,  or  else 
they  have  changed  to  the  contributory  method  of  support  and 
included  provisions  for  refunds. 

The  rules  of  the  nineteen  analyzed  systems  which  exact 
contributions  from  teachers  are  presented  in  the  statement 
on  the  page  opposite.  They  show  that  the  justice  and  the  prac- 
tical advantage  of  refunds  have  not  been  fully  recognized. 
Only  four,  the  Massachusetts,  Pennsylvania,  Connecticut  and 
New  York  City  systems  provide  for  a  full  return  of  all  contri- 
butions with  interest  accumulations.  Four  systems  make  no  re- 
funds. Those  allowed  in  eleven  systems  in  no  case  include  in- 
terest accumulations  and  frequently  amount  to  only  one-half  of 
the  teachers'  contributions. 

Withdrawal  and  Loan  Privileges.  In  addition  to  the 
benefits  provided  at  retirement  or  withdrawal  from  the  serv- 
ice through  resignation,  dismissal  or  death,  new  systems  tend 
to  extend  their  benefits  to  the  period  of  active  service.  Thus, 
the  new  system  of  New  York  City  permits  its  members  to 
withdraw  from  the  fund  that  part  of  their  accumulations 

92 


DISABILITY  BENEFITS 


PROVISIONS  FOR  RESIGNATION  OR  DISMISSAL 


PENSION  SYSTEM 

RETURN  < 

3F  CONTRIBUTIONS  IN 

CASE  or 

Resignation 

Dismissal 

Death  Before 
Retirement 

States: 
1    Illinois  

One-half,  if  teacher 

None 

None 

2   New  York  

served  less  than 
15  years 
None 

• 

« 

3.  New  Jersey  Re- 
tirement Fund 
4.  New  Jersey 
State  Pension 
5.  Massachusetts.  . 
6.  Pennsylvania  .  .  . 

7.  Connecticut  
8   Minnesota  

u 

All,  with  interest' 
All,  with  4  per 
cent  interest 
All,  with  interest 
One-half 

« 

Non-contributory 
system 
All,  with  interest 
All,  with  4  per 
cent  interest 
All,  with  interest 
None 

« 

All,  with  interest 
All,  with  interest 

All/with  interest 
One-half 

9   Wisconsin  

One-half 

One-half 

None 

10   California  

None 

$  None 

u 

1  1   Virginia  

« 

« 

« 

12   Michigan  

« 

« 

« 

13   Maine  

Non-contributory 

Cities: 
1.  New  York  City. 

2   Chicago  

All,  with  4  per 
cent  interest 
One-half 

system 

All,  with  4  per 
cent  interest 
All 

All,  with  4  per 
cent  interest 
None 

3.  Philadelphia  
4   Cleveland  

None 
One-half 

u 

All,    if    teacher 

u 

One-half 

5.  Boston  Perman- 
ent Fund 
6.  Boston    Retire- 
ment Fund 
7   Pittsburgh  

One-half 

served  less  than 
20  years;  pen- 
sion if  teacher 
served    more 
than  20  years 
Non-contributory 
system 
All 

Non-contributory 

None 

8   Baltimore  

One-half 

system 
None 

None 

9.  Buffalo  

All 

All 

All 

10.  New  Orleans  — 
11.  Denver  

One-half 

All 
Non-contributory 

All 

system 

93 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

which  is  above  the  minimum  required  by  law,  and  to  borrow 
from  the  fund  on  an  assignment  of  a  life  insurance  policy  a 
sum  not  exceeding  the  loan  value  of  the  policy.  A  member 
is  also  allowed  from  time  to  time  to  increase  or  reduce  his 
rate  of  contribution  to  his  savings  and  annuity  account,  pro- 
vided he  does  not  reduce  it  below  the  minimum  rate  required 
by  law.  These  benefits  may  help  in  various  cases  of  financial 
stringency  and  make  a  soundly  devised  system  still  more 
applicable  to  individual  conditions. 


94 


CHAPTER  VI 
DETERMINING    THE    COST    OF    BENEFITS 

The  nature  of  the  benefits  to  be  provided  by  the  system 
having  been  decided  upon,  the  next  problem  is  to  determine 
the  probable  cost  of  providing  those  benefits  at  any  named 
date  in  the  future,  in  order  that  methods  may  be  adopted  to 
insure  that  an  income  adequate  to  meet  the  computed  cost 
may  at  all  times  be  available. 

Growth  of  Pension  Payments.  It  is  not  generally  appre- 
ciated that  some  of  the  younger  members  of  the  force  to  which 
the  system  applies  will  qualify  for  retirement  and  for  the  bene- 
fits promised  only  twenty,  thirty  or  forty  years  after  the  estab- 
lishment of  the  system  and  may  live  thirty  or  forty  years  after 
retirement  and  thus  draw  their  benefits  as  many  as  sixty  or 
seventy  years  hence.  It  is  necessary,  therefore,  that  plans  for 
the  financing  of  the  system  look  ahead  some  sixty  or  seventy 
years  into  the  future.  Moreover,  it  is  precisely  in  the  remote 
future  that  the  greatest  difficulties  in  meeting  the  maturing 
pension  obligations  present  themselves.  The  annual  pension 
payments  are  very  small  in  the  beginning,  but  grow  from  year 
to  year  at  an  accelerating  rate  and  become  exceedingly  heavy 
in  the  future. 

To  facilitate  an  understanding  of  the  proportions  to 
which  maturing  pension  claims  may  grow,  it  is  advisable  to 
consider  first  the  case  of  a  single  teacher  retiring  under  pro- 
visions frequently  found  in  existing  systems. 

A  woman  teacher  enters  the  service  at  the  age  of  25  years 
and  remains  at  her  post  for  a  period  of  30  years.  Then  she 
retires  at  the  age  of  55  years  on  a  pension  of  $450,  or  one- 

95 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

half  of  her  active  salary  of  $900  per  annum.  According  to  a 
recent  investigation  of  the  mortality  experience  among 
teachers,  made  by  the  Commission  on  Pensions  of  the  city 
of  New  York,  a  woman  teacher  retiring  on  demand  at  the 
age  of  55,  unless  disabled  by  accident  or  disease,  has  a  life 
expectancy  of  19.78  years.1  Assuming  that  she  lives  19.78 
years  after  retirement,  she  will  draw  in  pensions  a  total  of 
$8,901.  If  she  received  a  uniform  rate  of  salary  of  $900  during 
the  30  years  of  service,  her  total  active  salary  would  have 
amounted  to  $27,000.  Her  total  pension  payments  of 
$8,901.00  would  require,  therefore,  a  total  outlay  of  about 
33  per  cent  of  her  active  salary  and  a  relatively  larger  per- 
centage if  she  had  started  with  a  small  salary  and  gradually 
been  promoted  to  the  $900  she  received  at  the  time  of  retire- 
ment. 

If  every  teacher  in  a  given  service  were  to  retire  under  the 
conditions  specified  above,  the  pension  payments  of  the  entire 
system  would  eventually  amount  to  33  per  cent  or  more  of  the 
total  pay-roll  since  the  conditions  applicable  to  one  unit  would 
naturally  obtain  where  there  is  a  collection  of  the  same  units. 
If  all  were  to  retire  after  twenty-five  or  twenty  years  and  some, 
in  case  of  disability  even  after  a  shorter  period,  and  if  the  de- 
pendents of  a  member  were  to  receive  a  pension,  the  pension 
payments  would  form  a  still  greater  proportion  of  the  active 
compensation.  But  all  do  not  retire.  Many  resign,  or  are 
dismissed  or  die  before  retirement  and  forfeit  for  themselves 
and  for  their  dependents  either  all  or  part  of  their  correspond- 
ing benefits.  Furthermore,  not  all  who  have  completed  the 
minimum  requirements  of  the  system  immediately  avail  them- 
selves of  retirement.  Many  continue  in  the  service  for  a  num- 
ber of  years  and  retire  at  a  later  age  after  which  the  average 
lifetime  is  shorter.  Furthermore,  the  half -pay  pension  is  some- 
times computed  on  the  average  salary  of  the  last  five  years — not 
on  the  frequently  higher  amount  of  salary  of  the  last  year — 

'The  expectation  of  life  or  "average  lifetime"  of  teachers  retiring  at 
various  ages  is  shown  in  Appendix  4,  table  5. 

96 


DETERMINING  THE  COST  OF  BENEFITS 

and  it  is  often  limited  by  a  certain  maximum  amount  which  it 
cannot  exceed  irrespective  of  the  amount  of  salary.  All  these 
and  other  factors  of  similar  nature  tend  to  reduce  the  otherwise 
tremendous  ratio  of  pension  payments  to  salary  payments. 
The  ultimate  pension  claims  will  vary,  therefore,  in  each 
system  according  to  its  provisions,  its  administration  and  the 
readiness  with  which  teachers  avail  themselves  of  their  right  to 
claim  pensions.  In  the  old  system  of  New  York  City,  for  in- 
stance, the  annual  pension  payments  were  estimated  ultimately 
to  run  to  more  than  20  per  cent  of  the  active  pay-roll,  if  the 
old  provisions  were  to  be  maintained.  Many  pension  systems 
for  teachers  in  this  country  grant  benefits  and  operate  under 
conditions  similar  to  those  which  obtained  in  New  York  City. 
Their  ultimate  pension  charge  will  be,  therefore,  in  the  neigh- 
borhood of  20  per  cent  of  the  pay-roll.  In  pension  systems 
with  more  conservative  provisions,  such,  for  instance,  as  apply 
to  teachers  of  the  state  of  Maine  or  the  city  of  Baltimore,  this 
charge  may  reach  only  15  per  cent  of  the  pay-roll.  On  the 
other  hand,  a  system  such  as  operates  in  Minnesota  and  allows 
its  teachers  the  extremely  liberal  privilege  of  retirement  on 
demand  after  20  years  of  service  may  eventually  be  con- 
fronted with  annually  maturing  pension  claims  running  well 
above  20  per  cent  of  the  pay-rolls. 

A  misleading  feature  of  the  financial  workings  of  a  pension 
system  is  the  somewhat  slow  development  of  maturing  claims 
above  referred  to. 

At  the  time  of  establishment  of  a  pension  system  only  a  few 
teachers  who  have  completed  a  long  term  of  service  or  have 
reached  an  advanced  age  are  placed  on  the  retired  list.  The 
annual  payments  on  their  account  are  small  in  comparison  with 
the  pay-roll  of  the  active  service.  There  are  several  reasons 
for  this.  In  the  first  place  those  eligible  or  about  eligible  to 
retire  are  the  survivors  of  a  comparatively  small  working  force 
of  twenty,  thirty  or  forty  years  ago.  In  the  second  place  a 
number  of  more  or  less  old  teachers  have  left  the  service  dur- 

97 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ing  the  years  preceding  the  establishment  of  the  system  who 
would  have  continued  in  the  service  or  would  have  retired  on 
a  pension  had  the  system  been  then  in  operation,  and  would 
have  eventually  qualified  for  the  pension.  Finally,  the  old 
teachers  do  not  avail  themselves  of  retirement  as  eagerly  in  the 
beginning  of  the  operation  of  the  system  as  they  do  when  the 
system  is  in  full  swing.  Neither  do  the  school  authorities  force 
them  out  of  the  service  as  freely  in  the  beginning  as  they  do 
when  the  retirement  system  has  taken  deeper  roots.  Thus, 
many  superannuated  or  disabled  teachers  remain  on  the  active 
pay-roll  drawing  full  salary  just  as  they  did  when  there  was  no 
pension  system. 

In  the  fourth  place,  the  retired  list  in  the  beginning  con- 
tains the  survivors  of  the  pensioners  retired  during  the  pre- 
ceding year  or  few  years  only,  whereas  when  normal  operation 
has  been  reached  it  contains  the  survivors  of  the  pensioners 
retired  during  the  preceding  thirty  or  forty  years. 

With  each  succeeding  year  the  number  of  annual  additions 
to  the  pension  list  necessarily  increases,  reflecting  the  growth 
of  the  active  personnel  of  years  ago,  the  lesser  rate  of  resigna- 
tion or  dismissal  among  the  older  teachers  and  the  greater 
readiness  of  the  latter  to  retire  or  of  the  school  authorities  to 
force  their  retirement.  Each  year  the  number  of  additions  to 
the  pension  list  exceeds  the  number  of  terminations  of  pensions 
through  death.  Frequently  in  the  beginning  the  proportion  is 
ten  additions  to  the  list  to  one  termination,  and  the  resulting 
annual  increase  in  the  number  of  pensioners  is  as  much  or  even 
greater  than  90  per  cent,  whereas  the  normal  annual  increase  in 
the  population  of  the  community  or  the  school  personnel,  which 
support  the  system,  is  only  3,  4  or  5  per  cent.  Not  until  sixty 
or  seventy  years  have  elapsed  does  the  margin  between  the  new 
crop  of  pensioners  and  the  deaths  among  the  old  become  nor- 
mal, since,  as  already  pointed  out,  it  takes  about  that  mucfi  time 
for  the  entire  force  to  which  the  system  originally  applied  to  be 
replaced  by  a  new  generation  and  for  the  abnormal  conditions 

98 


DETERMINING  THE  COST  OF  BENEFITS 

described  to  terminate.  Unless  in  the  meantime  new  factors 
of  abnormal  growth  have  appeared,  the  pension  roll  will,  from 
then  on,  accurately  reflect  the  growth  of  the  active  personnel 
and  pay-roll  and  proceed  at  the  same  rate  as  the  latter.  Then 
only  is  reached  that  period  or  level  of  operation  of  the  system 
which  is  known  in  pension  terminology  as  "normal." 

The  increase  in  the  pension  roll  and  in  the  percentage  ratio 
to  the  pay-roll  is  often  accelerated  and  the  long  period  for 
reaching  "normal  level"  is  postponed  by  the  liberalization  of  the 
original  provisions  of  the  system :  the  required  length  of  serv- 
ice is  shortened  or  retirement  age  lowered,  the  pension  is  in- 
creased, or  additional  disability  or  death  benefits  are  intro- 
duced. While  all  such  changes  increase  the  cost  of  the  system, 
they  naturally  involve  only  small  immediate  disbursements  and 
show  their  full  financial  effect  only  in  the  distant  future.  It 
is  for  this  reason  that  the  annual  pension  disbursements  of  some 
pension  systems  abroad,  which  are  more  than  a  hundred  years 
old,  still  continue  to  grow  at  a  more  rapid  rate  than  the  pay- 
roll. 

The  following  examples  of  tremendous  growth  of  pension 
disbursements  as  compared  with  the  growth  of  the  pay-roll  may 
be  cited.  These  examples  are  taken  from  pension  systems  in 
other  branches  of  service  than  teachers,  as  the  teachers'  pen- 
sion systems  are  of  comparatively  recent  origin : 

The  London  Metropolitan  Police  Pension  Fund  started  75 
years  ago  (in  1844)  with  annual  disbursements  of  about  8  per 
cent  of  salaries.  Its  disbursements  now  equal  about  30  per 
cent  of  the  pay-roll. 

The  Paris  Police  Pension  Fund,  started  about  a  hundred 
years  ago  with  a  small  pension  roll,  developed  one  which  in 
1909  amounted  to  26.4  per  cent  of  the  pay-roll  and  is  now  near- 
ing  30  per  cent. 

The  National  Civil  Service  of  France  has  a  pension  roll 
which  amounted  to  about  17  per  cent  of  the  pay-roll  in  1912 
and  is  now  running  closer  and  closer  to  20  per  cent. 

In  the  British  Civil  Service  the  proportion  between  the  pen- 

99 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

sion  roll  and  the  pay-roll  varies  in  different  departments :  in  the 
Local  Government  Board  it  reached  17.8  per  cent  twenty-five 
years  ago;  in  the  Prison  Department  it  amounted  to  25  per 
cent  in  1903 ;  in  the  Treasury  Department  to  29  per  cent  in  the 
same  year,  and  in  the  Customs  to  30.6  per  cent. 

In  the  Civil  Service  of  Austria  the  ratio  of  pension  roll 
to  the  pay-roll  reached  33  per  cent  in  1910.  Only  a  small  part, 
about  one-tenth,  of  this  tremendous  pension  roll  was  covered 
from  the  contributions  of  the  employees.  The  state  was  re- 
quired to  appropriate  annually  for  civil  service  pensions  an 
amount  equal  to  about  30  per  cent  of  the  aggregate  salaries. 

Cost  as  Related  to  Method  of  Financing  System. 
Viewed  purely  as  a  matter  of  mathematics,  it  may  of 
course  correctly  be  said  that  the  cost  of  paying  a  given  bene- 
fit, payable  at  a  given  time,  is  absolutely  fixed,  regardless  of 
the  method  employed  for  financing  the  payment  when  it  falls 
due.  But  from  the  standpoint  of  the  practical  operation  of 
a  pension  system,  it  is  a  matter  of  prime  importance  to  what 
extent  the  money  required  for  the  payment  of  benefits  is 
raised  at  the  time  the  liability  for  the  payment  is  first  assumed 
and  during  the  period  when  it  is  maturing,  and  to  what  extent, 
on  the  other  hand,  the  raising  of  the  money  is  delayed  until 
the  liability  actually  matures.  To  the  extent  that  a  system 
is  financed  on  the  first-mentioned  plan,  it  is  said  to  operate 
on  the  "reserve"  basis;  to  the  extent  that  it  is  financed  on 
the  latter  plan,  it  is  said  to  operate  on  the  "cash  disbursement" 
basis.  It  needs  no  argument  here  that  only  in  the  "reserve" 
method  of  financing  a  pension  fund  are  security  and  fairness 
to  be  had. 

The  cardinal  principle  of  a  system  operating  on  the  "re- 
serve" basis  is  that  increases  in  future  pension  payments  are 
anticipated  and  taken  care  of  before  they  mature.  Each 
teacher  is  considered  a  definite  obligation  against  the  system 
from  the  day  he  enters  the  service.  A  "reserve"  fund  is 
established  and  built  up  by  means  of  setting  aside  for  each. 

100 


DETERMINING  THE  COST  OF  BENEFITS 

teacher,  each  year  during  his  service,  the  necessary  amounts 
properly  calculated  and  usually  expressed  in  terms  of  per- 
centage of  salary.  These  amounts,  which  are  secured  through 
assessments  on  salaries  or  appropriations  from  public  funds, 
or  through  combined  contributions  of  the  teachers  and  of  the 
government,  are  accumulated  at  interest.  When  a  teacher 
retires,  the  "reserve"  accumulated  in  this  manner  on  his 
behalf  is  adequate  to  pay  his  pension  for  the  probable  dura- 
tion of  his  life  after  retirement.  In  the  majority  of  pension 
systems,  teachers  forfeit  all  in  the  event  of  death,  or  part  of 
the  claim  for  a  proportionate  pension  if  they  leave  the  service 
before  becoming  eligible  to  retirement.  If  such  systems  are 
operated  on  the  "reserve"  method,  the  saving  to  be  derived 
from  such  lapses  is  calculated  in  advance  and  utilized  for 
the  reduction  of  the  required  rates  of  contribution. 

The  main  advantage  of  operating  a  pension  system  on  the 
"reserve"  basis  lies  in  the  fact  that  each  generation  pays 
currently  its  own  obligations.  A  proportionate  part  of  the 
future  pension  requirements  is  set  aside  each  year,  and,  if 
calculated  properly,  the  pension  scheme  under  such  conditions 
is  solvent  at  all  times.  Hardly  less  important  is  the  fact  that 
a  clear  understanding  of  the  pension  cost  is  secured  by  the 
definite  and  constant  relationship  which  each  year's  contri- 
bution to  the  pension  fund  bears  to  the  same  year's  expendi- 
ture for  active  services.  Having  been  accepted  as  reasonable 
by  all  concerned,  the  possibility  of  arbitrary  discontinuance 
or  restriction  of  the  scheme  and  consequent  disappointment 
of  prospective  beneficiaries  is  avoided. 

Actuarial  Determination  of  Cost.  The  determination  of 
the  probable  cost  of  the  benefits  obviously  involves  a  compu- 
tation of  the  probable  mortality  and  disability  of  the  present 
and  future  members  of  the  fund.  Such  computations  can  be 
made  accurately  only  by  a  trained  and  experienced  actuary. 
In  determining  the  probable  income  of  the  fund,  too,  actuarial 
methods  may  be  necessary.  It  is  to  the  failure  of  teachers' 
pension  funds  in  this  country  to  avail  themselves  of  expert 

101 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

actuarial  advice,  particularly  in  connection  with  the  cost  of 
benefits,  that  the  unsound  if  not  insolvent  condition  now 
general  among  them  is  due. 

It  is  not  the  purpose  of  the  present  volume  to  discuss  the 
detailed  actuarial  questions  involved  in  the  determination  of 
the  costs  of  the  several  benefits  in  question.  It  will  be  of 
value,  however,  to  point  out  the  principal  elements  and  con- 
siderations which  must  be  taken  into  account  in  computing  the 
major  probabilities  of  the  cost  of  a  pension  system. 

In  attempting  to  determine  the  probable  cost  of  the 
benefits  to  be  provided,  the  actuary's  first  task  is  to 
analyze  carefully  the  personnel  records  of  the  service. 
He  must  then  measure  the  various  forces  which  bear 
on  the  cost  of  pensions,  and  express  them  in  terms  of  rates 
so  that  they  may  be  used  in  calculations.  An  approximate 
idea  of  the  magnitude  of  the  actuary's  preliminary  work  may 
be  formed  by  examining  the  following  list  of  rates  which  he 
would  have  to  prepare  from  the  experience  of  the  service 
itself,  or  adopt  from  elsewhere  in  connection  with  the  cost 
calculations  of  a  typical  pension  system  for  teachers : 

1.  Rate  of  withdrawal  from  service  because  of  resignation. 

2.  Rate  of  withdrawal  from  service  because  of  dismissal. 

3.  Rate  of  mortality  in  active  service. 

4.  Rate  of  salary  increases  in  active  service. 

5.  Rate  of  retirement  because  of  superannuation. 

6.  Rate  of  retirement  because  of  disability. 

7.  Rate  of  mortality  after   retirement  because   of   super- 

annuation. 

8.  Rate  of  mortality  after  retirement  because  of  disability. 

Having  ascertained  these  rates,  the  actuary  uses  the  proper 
rate  of  interest  which  may  be  earned  on  invested  accumula- 
tions and  calculates  the  contributions  toward  the  reserve 
which  are  required  to  support  the  proposed  benefits.  Under 
the  "reserve"  method  the  compound  interest  factor  enters  to 
reduce  the  apparent  cost  of  pensions  to  more  than  one-half 
of  the  apparent  cost  under  the  "cash  disbursement"  plan,  All 

1 02 


DETERMINING  THE  COST  OF  BENEFITS 

other  conditions  being  equal,  the  same  amounts  are  actually 
paid  out  in  benefits  under  both  plans.  The  pension  cost,  how- 
ever, is  measured  under  the  "reserve"  plan  by  the  percentage 
of  the  pay-roll  needed  to  be  set  aside  currently  to  secure  future 
pensions;  whereas  such  cost,  under  the  "cash  disbursement" 
plan,  is  measured  by  the  percentage  which  the  current  pension 
payments  form  of  the  annual  pay-roll.  The  first  is  a  constant 
factor  while  the  second  is  a  changing  and  steadily  increasing 
factor.'1 

To  facilitate  an  appreciation  of  the  cost-reducing  effect  of 
the  interest  factor  in  pension  calculations,  an  illustrative 
retirement  case  may  be  used.  A  woman  teacher  retires  at  the 
age  of  55  years  on  a  pension  of  $450,  lives  19.78  years  there- 
after —  the  average  life  time  of  a  woman  pensioner  of  her  age 
—  and  draws  a  total  of  $8,901.00  ($450  x  19.78)  in  pensions. 
Under  the  "reserve"  method  of  providing  pension  payments, 
only  $5,773.50  ($450  x  I2.83)2  need  to  be  on  hand  at  the  date 
of  her  retirement,  which  sum,  together  with  interest  accumu- 
lations at  4  per  cent  ($3,127.50),  would  be  sufficient  to  pay 
the  annual  instalments  of  $450,  totaling  about  $8,901.  oo.1 

Going  back  a  step  further,  the  same  interest-reducing  effect 
of  the  reserve  system  is  reflected  in  the  amount  of  the  annual 
or  other  periodical  contributions  required  during  the  period 
of  active  service  to  insure  the  required  amount  being  on  hand 
at  the  time  of  retirement.  Thus,  in  the  case  just  cited,  it  is 
necessary,  as  stated,  to  have  in  the  reserve  at  the  time  of 
retirement,  $5,773.50.  Yet  all  that  is  required  to  secure  this 


definition  of  the  difference  between  the  two  methods,  which  has 
been  adopted  in  the  reports  of  the  Carnegie  Foundation  (Bulletin  9)  and 
the  Illinois  Pension  Laws  Commission,  originally  appeared  in  the  report 
of  the  N.  Y.  Bureau  of  Municipal  Research  on  the  Police  Pension  Fund 
of  the  City  of  New  York  (1913),  and  the  Report  of  the  New  York  (City) 
Commission  on  Pensions  on  the  Teachers'  Retirement  Fund  (1915). 

"Under  the  "reserve"  method,  the  amount  needed  to  be  in  hand  for  a 
beneficiary  of  a  given  age  at  the  date  of  retirement  to  pay  a  pension  of 
one  dollar  during  life  time  is  first  calculated.  This  amount  is  called  an 
"annuity  value."  For  women  teachers  of  New  York  City  retiring  at  age 
55  on  a  service  pension,  it  was  determined  to  be  $12.83.  See  Appendix 
4,  table  3. 

I03 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

reserve  is  an  annual  contribution  of  about  $98.98  for  each 

of  the  30  years  of  the  pensioner's  active  service — a  total  of 
$2,969.40.  The  difference — $2,804.10 — would  be  made  up 
by  the  interest,  compounded  at  4  per  cent.  If  it  be  assumed 
that  the  teacher  receives  a  uniform  salary  of  $900  during  her 
entire  service,  the  annual  contribution  of  $98.98  would  amount 
to  about  ii  per  cent  of  her  salary.  In  the  case  under  dis- 
cussion, therefore,  the  interest  factor  reduces  the  cost  of  the 
pension  from  33  per  cent  under  the  cash  disbursement  system, 
to  ii  per  cent  under  the  reserve  method. 

The  Problem  of  Accrued  Liabilities.  "Accrued  liabili- 
ties" are  a  rock  upon  which  many  a  teachers'  pension  system 
has  split.  System  after  system  has  been  established  with  a 
rate  of  contribution  based  upon  the  minimum  period  of  service 
required  for  a  pension,  without  it  being  appreciated  that  only 
those  entering  the  service  after  the  adoption  of  the  system 
would  contribute  to  it  for  the  whole  of  that  period. 

In  applying  their  benefit  provisions  to  the  teachers  in  service 
at  the  time  of  establishment  of  the  system,  who  have  been 
in  the  service  for  varying  numbers  of  years  prior  to  the 
establishment  of  the  fund,  all  the  retirement  funds  allow  full 
credit  and  pay  benefits  for  such  previous  services,  although 
no  contributions  were  then  made  and  no  fund  was  then  in 
existence.  The  greatest  difficulty  of  course  presents  itself  in 
the  case  of  the  older  teachers,  who  have  a  long  period  of 
service  to  their  credit,  and  who  apply  for  a  pension  from 
the  fund  immediately  or  a  short  time  after  they  have  joined, 
and  in  whose  cases  the  fund  must  be  able  to  make  immediate 
payments.  If  we  take  the  case  of  an  old  teacher,  who  has 
30  years  of  prior  service  to  his  credit  and  would  retire  five 
years  after  the  establishment  of  the  system  on  a  pension  of 
half -pay,  we  find  that  a  contribution  made  for  five  years  at 
the  rate  of  15  per  cent  of  salary  will  produce  only  approxi- 
mately a  seventh  of  the  cost  of  his  benefit.  Part  of  the  re- 
mainder may  be  supplied  from  the  forfeited  contributions  of 

104 


DETERMINING  THE  COST  OF  BENEFITS 

other  members,  if  the  system  is  based  on  lapses,  but  the  bulk 
of  it  represents  a  deficiency. 

With  the  younger  teachers  the  problem  is  less  difficult. 
The  younger  they  are  the  shorter  their  term  of  prior  service 
and  the  longer  they  must  contribute  in  the  future  before 
applying  for  retirement  and  drawing  a  pension. 

Suppose  an  actuarial  investigation  shows  that  2,000  out 
of  8,000  "present  members"  of  the  system  would,  at  some 
time  or  other,  apply  for  the  pension.  Each  of  the  2,000  would 
have  some  period  of  prior  service  to  his  credit  and  represent 
a  certain  deficiency  on  that  account.  If  the  average  deficiency 
is  estimated,  say,  at  $2,500  for  each  prospective  pensioner, 
the  total  deficiency  on  this  account,  or  "accrued  liability"  as 
it  is  frequently  termed,  would  amount  to  $5,000,000. 

The  majority  of  the  retirement  funds  in  the  United  States 
have  been  established  without  sufficient  calculation  of  the 
cost  of  the  "accrued"  liabilities  which  they  have  thus  assumed. 
Only  a  slight  difference  or  no  difference  at  all  is  made 
between  the  new  entrants  and  the  members  already  in  the 
service  at  the  establishment  of  the  system. 

The  accrued  liabilities  begin  to  mature  immediately  after 
the  establishment  of  the  systems.  Each  year  a  new  proportion 
of  these  "accrued  liabilities"  is  presented  for  payment.  And 
the  payments  from  the  fund  onj  this  account  constantly 
accelerate  during  the  first  thirty  years  or  more  of  its  operation. 
The  persons  responsible  for  the  establishment  of  the  unscien- 
tific systems  seldom  realize  the  fact  that  since  the  fund  accepts 
the  liabilities  accrued  from  a  period  when  it  was  not  yet  in 
operation  but  receives  no  equivalent  assets  from  this  period, 
it  starts  with  an  actuarial  deficiency.  Outside  of  the  payment 
of  small  arrears,  which  practically  have  no  effect  on  the  prob- 
lem, they  have  taken  no  steps  to  offset  this  deficiency.  The 
method  of  these  systems  is  to  ignore  the  initial  deficiency  and 
to  shift  it  upon  the  future,  from  which  they  borrow  without 
repaying.  This  procedure  has  brought  many  systems  to  grief. 

105 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

No  estimates  of  their  "accrued  liabilities"  were  made  by 
these  systems  at  the  time  of  their  establishment.  The  immense 
proportions  of  these  liabilities  remained  unknown.  All  these 
systems  in  providing  that  the  benefits  in  respect  to  prior 
services  should  be  paid  from  the  current  revenues  of  the  fund 
have  prepared  the  way  for  insolvency  both  with  regard  to 
accrued  liabilities  and  the  liabilities  on  account  of  subsequent 
services. 

No  attempt  has  ever  been  made  in  these  systems  to  ascer- 
tain how  long  they  will  be  able  to  pay  the  "accrued  liabili- 
ties" from  their  current  revenues.  But  they  proceed  as  though 
they  expect  to  be  able  to  do  so  indefinitely.  They  pay  as 
long  as  they  have  available  cash  and  give  no  thought  to  the 
future.  They  did  not  realize  at  the  time  of  their  establish- 
ment that  these  payments  would  increase  each  year  and  reach 
tremendous  amounts  far  in  excess  of  their  current  revenues. 

During  the  first  few  years  they  are  encouraged  in  their 
supposition.  Few  retirements  are  made  and  the  payments 
are  inconsiderable.  They  do  not  realize  that  the  average 
teacher  lives  from  twelve  to  twenty  years  (according  to  age 
and  sex,  as  shown  in  Appendix  5  after  retirement,  and  that  it 
will  take  many  years  before  the  new  payments  accruing  each 
year  on  account  of  the  past  will  be  equaled  by  terminations. 
They  fail  to  consider  that  until  this  climax  is  reached  the 
payments  will  increase  from  year  to  year  and  by  the  time 
they  have  begun  to  decline  the  payments  due  the  new  entrants 
will  then  have  grown  considerably,  and  they  do  not  foresee 
that  it  will  take  no  less  than  sixty  or  seventy  years  or  even 
longer  before  the  last  of  the  old  entrants  will  die  and  the  final 
portion  of  "accrued  liabilities"  thereby  be  discharged. 

With  each  year  the  disbursements  which  increase  on  account 
of  the  maturing  "accrued  liabilities"  require  a  greater  portion 
of  the  current  revenues.  With  each  year  a  smaller  balance 
goes  to  the  fund  and  the  interest  earned  is,  therefore,  rela- 
tively smaller.  Presently  the  disbursements  exceed  the 

106 


DETERMINING  THE  COST  OF  BENEFITS 

revenues  and  draw  upon  the  balance  of  the  fund  which  then 
becomes  bankrupt.  The  pensions  already  granted  are  reduced 
and  no  new  pensions  are  allowed.  This  usually  happens  be- 
fore the  disbursements  on  account  of  past  services  have 
reached  their  climax.  The  bankrupt  fund  still  has  on  hand 
the  greater  proportion  of  the  "accrued  liabilities"  undis- 
charged. 

Discussion  of  the  methods  which  should  be  employed  for 
meeting  the  problem  of  accrued  liabilities  is  reserved  for  a 
subsequent  chapter  (Chapter  VIII). 

Inadequacy  of  Contributions  in  Existing  Systems.  De- 
spite the  fact  that  the  cost-reducing  effect  of  compound  inter- 
est is  greater  than  is  commonly  appreciated  by  the  framers 
of  pension  systems,  the  rates  of  contribution  fixed  by  them 
have  almost  invariably  been  inadequate  to  meet  the  liabilities 
incurred.  All  the  existing  systems,  except  those  of  Massa- 
chusetts, New  York  City,  Pennsylvania  and  Connecticut,  were 
established  without  estimates  of  the  cost  of  benefits  and  with 
revenues  which  were  inadequate  to  assure  their  permanent 
operation. 

In  eight  of  the  twenty-four  systems  selected  for  study  the 
revenue  from  the  contributions  of  the  teachers  and  the  govern- 
ment amounts  to  only  2  per  cent  of  salaries  or  even  less.  In 
five  systems  the  revenue  from  contributions  amounts  to  more 
than  2  per  cent  of  salaries  but  less  than  3  per  cent.  In  Wis- 
consin about  10,000  teachers  are  assessed  I  per  cent  and  only 
1,400  teachers  2  per  cent,  so  that  the  total  contributions  of 
teachers,  amounting  to  $64,000,  are  slightly  more  than  I  per 
cent;  the  state  contributed  from  the  tax  $66,000  in  1916, 
or  also  slightly  more  than  i  per  cent.  In  the  systems  of 
California,  Illinois,  Minnesota  and  Denver  the  exact  ratio 
between  the  amount  of  revenue  and  pay-roll  is  not  available 
but  it  can  be  safely  estimated  as  not  exceeding  3  per  cent.  In 
the  systems  of  Chicago  and  Cleveland  the  revenue  is  between 

107 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

3  per  cent  and  4  per  cent.  In  Chicago  the  teachers  and  the 
city  contribute  about  1.4  per  cent  each  or  about  2.8  per  cent 
together,  but  the  city  may  under  the  statute  contribute  twice 
as  much  as  the  teachers. 

The  systems  of  Massachusetts,  New  York  City,  Pennsyl- 
vania and  Connecticut  are  the  only  systems  which  have  a 
revenue  bearing  a  greater  ratio  to  salaries  than  4  per  cent. 
Their  revenues  range  from  7  per  cent  to  13  per  cent  as  shown 
below. 

The  inadequacy  of  contributions  in  the  majority  of  the 
existing  systems  to  provide  the  benefits  promised  may  be 
ascertained  by  comparing  them  with  the  contributions  and 
benefits  of  systems  which  have  made  reliable  estimates  of  cost. 
The  table  on  the  following  page  presents  the  contributions  and 
benefits  of  the  four  scientifically  constructed  systems. 

In  the  table  on  page  1 1 1  the  attempt  is  made  to  compare  the 
provisions  of  the  Massachusetts  system  with  the  other  sys- 
tems of  the  country  (except  the  three  other  scientifically  con- 
structed systems  already  mentioned).  Of  the  two  funds  of 
which  the  Massachusetts  system  consists,  which  are  financially 
independent  and  which  pay  different  benefits,  the  annuity 
fund  is  better  suited  for  a  comparison,  since  it  is  based  on 
more  reliable  estimates  and  is  more  widely  differentiated  from 
the  other  systems  than  is  the  pension  fund. 

The  amount  of  contributions  is  expressed  differently  in 
every  fund.  In  some  funds  the  annual  contribution  which 
each  member  pays  is  expressed  in  dollars  and  cents ;  in  others 
as  a  percentage  of  salary;  in  some  of  the  systems  the  rate  is 
uniform  throughout  the  period,  whereas  in  others  it  varies 
according  to  length  of  service.  A  further  complication  arises 
from  the  fact  that  in  a  number  of  systems  the  government 
contributes  annually  a  certain  Subsidy  expressed  in  thousands 
of  dollars.  These  complications  make  an  accurate  comparison 
impossible,  but  a  general  comparison  may  be  made  by  reducing 
the  various  forms  of  contributions  to  a  uniform  basis.  In  the 

108 


DETERMINING  THE  COST  OF  BENEFITS 


1 


Si 


Is 

s<§ 


>,  W) 

&1 


y  fo 
f  thi 


Amount  nece 
of  "pension 


£ 

LO 

s 

I 


ScS 


IS 


5  S  S  S  8  ^ 

«         a'- 


•2    l-<    CO    OT  •»->  OO 


rf'C 


r 
ir 


ual 
a 
ntl 
for 
their 
con 


>«B.£ 

!^!    O.  >> 


,000  annu 
rve,  plus 
ensions  curre 
ntribution 
cording  to 
me  a  total 


$ 


res 
pe 
co 
ac 
ti 


u 


109 


*O  -      ^ 

«j  ox: 

111 


o  o 


v  3  o  -y  ° 

"**f  8 

iiiji 

i^s^l 

•^  «  a  2  c  >, 
^  fc^lS  °^ 

IMfi 

G      «4-i  CXO**-" 
P  CO  O  tn  -M  O 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

table  on  the  following  page  they  are  expressed  as  a  percentage 
of  salaries  of  the  teachers  in  the  respective  systems. 

The  result  given  under  the  first  head  shows  that  while  in 
the  Massachusetts  Annuity  Fund  the  contributions  amount 
to  5  per  cent  of  salaries,  in  other  funds  they  total  only  2  per 
cent  to  3  per  cent.  Furthermore,  in  Massachusetts  the  entire 
5  per  cent  contribution  is  deposited  in  the  fund,  in  the  other 
systems  only  the  unexpended  balance  of  the  contribution  is 
deposited.  The  expenditures  in  these  systems,  as  shown  in 
the  previous  chapters,  increase  rapidly,  the  portion  which  goes 
to  the  fund  becomes  smaller  each  year  until  finally  all  the 
contributions  are  expended  and  no  contributions  are  left  to 
be  carried  to  the  fund.1  Thirdly,  the  difference  in  contribu- 
tions is  emphasized  on  account  of  the  compound  interest 
factor.  The  large  contributions  in  Massachusetts  earn  interest 
on  the  entire  amount.  It  increases  on  that  account  alone  by 
more  than  one-half  within  thirty  years.  On  the  other  hand 
the  small  contribution  in  other  systems  draws  interest  only 
on  the  portion  which  is  deposited  and  which  decreases  from 
year  to  year.  The  fourth  point  shows  that  whereas  in  Massa- 
chusetts, in  the  case  of  the  average  member,  thirty  contribu- 
tions must  be  made,  in  other  systems  frequently  only  twenty- 
five  are  required. 

The  second  half  of  the  table  shows  the  extent  to  which  the 
benefits  paid  from  the  other  funds  are  higher  than  those  paid 
from  the  Massachusetts  Annuity  Fund.  Thus,  under  the 
fifth  point,  the  Massachusetts  fund  pays  only  benefits  with 

'The  rapid  decrease  of  the  portion  deposited  each  year  is  caused  by 
payments  of  benefits  for  services  rendered  previous  to  the  fund's  estab- 
lishment. The  following  chart  which  relates  to  the  Philadelphia  fund 
illustrates  this  decrease. 

Portion  of  the  Annual  Contribution 
Year  of  Operation  Deposited  in  the  Fund 

ist  91.5  per  cent 

3d  64.5        " 

5th 484 

7th  41-3 

9th  36.4 

A  number  of  funds  have  already  reached  the  point  where  the  entire 
annual  contribution  has  to  be  expended. 

110 


DETERMINING  THE  COST  OF  BENEFITS 


A  SUMMARY  COMPARISON  BETWEEN  THE  MASSACHUSETTS  SYSTEM  AND  OTHER 

SYSTEMS  (EXCEPT  NEW  YORK  CITY,  PENNSYLVANIA 

AND  CONNECTICUT) 


Systems  Other  Than 
Massachusetts  (ex- 
cept New  York 
City,  Pennsylvania 
and  Connecticut) 

MASSACHUSETTS  SYSTEM 

Annuity  Fund 
(on  a  reserve  basis) 

Pension  Fund  (on  a 
cash  disbursement 
basis) 

I—  CONTRIBUTIONS 

1.  The   amount   of 

2  per  cent  to  3 

5    per    cent    of 

Increasing      per- 

the total  annual 

per  cent  of  sal- 

salary 

centage 

contribution 

ary 

from  the  teach- 

ers and  govern- 

ment expressed 

as  percentage  of 

salary 

2.  Is  the  entire  con- 

Part 

All 

None 

tribution  depos- 

V 

ited  in  the  fund 

or  only  part? 

3.  Is  interest  earned 

On  the  deposited 

On  all 

None 

on    the    entire 

part 

contribution  or 

only  on  a  part? 

4.  How  many  con- 

25 or  30 

Until  age  60,  on 

None   before  re- 

tributions are  re- 

the      average 

tirement,    pay- 

ceived   on    ac- 

about 30  con- 

ments   by    the 

count  of  an  in- 

tributions 

state  begin  from 

dividual   teach- 

the date  of  re- 

er before  he  re- 

tirement 

tires? 

II—  BENEFITS 

5.  Are  benefits  paid 

Previous  and  sub- 

Only subsequent 

Previous  and  sub- 

for   both    pre- 

sequent 

sequent 

vious  and  sub- 

sequent services? 

6.  What  is  the  av- 

Yv, salary1 

Less  than  y±  sal- 

More than  J^  sal- 

erage amount  of 

ary  at  present, 

ary  at  present, 

benefit? 

%  salary  in  the 

Y±  salary  in  the 

future 

future 

7.  How    early    can 

In  most  of  the 

Not  before  age 

Not  before  age  60 

the    benefit   be 

systems  at  any 

60 

granted? 

age      provided 

served  25  or  30 

years 

8.  What  is  the  aver- 

If retired  at  age 

If  retired  at  age  60  or  later:    to 

age  number  of 

50  or  later:  to 

women    16  J^    payments   or    less; 

annual        pay- 

women 23  pay- 

to men  12.7  payments  or  less 

ments  which  the 

ments  or  less; 

fund  must  make 

to    men    16% 

to     a     retired 

Eayments      or 

teacher     before 

5SS 

he  dies? 

In  systems  which  provide  the  same  amount  of  benefits  for  all  salaries,  it 
usually  equals  about  one-half  of  the  average  salary  of  all  teachers. 

Ill 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

regard  to  services  rendered  subsequent  to  the  establishment 
of  the  fund;  all  the  other  systems  pay  benefits  with  regard  to 
both  previous  and  subsequent  service.  The  cost  which  these 
funds  must  meet  on  account  of  previous  service,  as  explained 
in  the  preceding  section,  is  tremendous. 

The  sixth  head  shows  the  average  benefit  paid  from  the 
annuity  fund  in  Massachusetts  to  be  less  than  one-half  that 
paid  by  other  funds.  It  is  very  low  during  the  beginning  of 
the  fund's  operation  but  gradually  increases  until  it  reaches, 
after  approximately  thirty  years,  about  one-fourth  of  the 
salary,  at  which  point  it  remains.  In  sharp  contrast  the  aver- 
age benefit  in  other  funds  amounts  to  one-half  salary  immedi- 
ately after  the  establishment  of  the  fund. 

Again,  under  point  seven,  it  is  shown  that  while  in  Massa- 
chusetts the  benefit  cannot  be  paid  before  60  years  of  age, 
in  the  other  systems  it  can  be  paid  at  any  time,  provided  the 
teacher  has  served  for  25  years.  The  significance  of  the 
retirement  condition  in  these  sytems  is  made  clear  under  point 
eight.  The  number  of  payments  which  the  fund  has  to  make 
in  case  of  early  retirement  is  considerably  greater  than  in 
the  case  of  retirement  at  a  late  age;  a  woman  teacher  on  the 
average  receives  her  pension  during  twenty-three  years  if 
retired  at  age  50,  during  sixteen  and  a  half  years  if  retired 
at  age  60,  and  during  less  than  thirteen  and  a  half  years  if 
retired  at  age  65.  The  cost  of  benefits  in  the  systems  allow- 
ing early  retirement  is,  therefore,  considerably  higher  than 
the  cost  of  benefits  in  the  Massachusetts  Annuity  Fund,  which 
provides  them  only  after  age  60. 

All  these  points  prove  that  the  funds  which  receive  lower 
contributions  and  earn  little  interest  are  providing  far  more 
costly  benefits  than  the  fund  which  receives  twice  as  large 
contributions  and  earns  considerable  interest.  It  is  evident 
that  the  cost  of  retirement  benefits  has  either  been  considerably 
overestimated  in  the  Massachusetts  fund  or  grossly  under- 
estimated in  other  funds.  Since  the  Massachusetts  rates  are 

112 


DETERMINING  THE  COST  OF  BENEFITS 

based  upon  mortality  investigations  and  minute  actuarial  cal- 
culations, while  others  are  not,  the  conclusion  must  be  made 
that  the  latter  have  committed  the  grave  error  of  providing 
utterly  inadequate  revenues. 

The  conclusion  as  to  the  inadequacy  of  contributions  in  the 
existing  systems  is  confirmed  by  the  experience  of  the  old 
fund  of  New  York  City,  and  of  the  funds  of  Boston,  Virginia 
and  others  in  which  the  insufficiency  of  revenues  has  necessi- 
tated either  a  reduction  of  benefits,  a  discontinuance  of 
granting  new  retirements,  an  increase  of  contributions,  or 
a  fundamental  reorganization  of  the  entire  system.  In  some 
of  these  systems  the  insufficiency  appeared  after  two  or  three 
years  of  operation;  in  others  only  after  fifteen  or  even  twenty 
years.  Their  experience  tends  to  show  that  with  the  present 
rate  of  contributions  none  of  the  existing  funds  could  operate 
for  more  than  about  thirty  years  without  exhausting  their 
revenues,  and  that  in  most  of  these  systems  the  revenues 
would  be  exhausted  after  a  shorter  period. 

Estimating  the  Liabilities  of  a  Going  System.  In  the 
reorganization  of  an  unscientific  system  and  the  transition 
to  a  scientific  system  there  is  presented  the  special  problem 
of  determining  the  liabilities  against  the  fund  already  incurred. 
This  may  conveniently  be  done  by  considering  separately 
the  liabilities  incurred  on  behalf  of  persons  already  on  the 
retired  list  and  those  incurred  on  behalf  of  the  persons  still  in 
active  service.  At  the  time  of  reorganization  of  the  New 
York  City  fund  the  liabilities  on  account  of  the  approximately 
1,500  pensions  then  outstanding  amounted  in  round  figures  to 
$io,84O,ooo.1  A  special  contribution  was  provided  for  their 
liquidation. 

Next  the  accrued  liabilities  on  account  of  the  prior  services 
of  the  active  members  are  valued.  Their  amount  depends 
on  the  rate  of  benefits  which  are  allowed  for  prior  services. 

'It  consisted  of  two  elements :  liability  for  service  pensions  amounting 
to  $8,886,500  and  liabilities  for  disability  pensions  aggregating  $1,953,600. 

"3 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

A  special  method  is  provided  for  their  liquidation.  They 
are  not  allowed  to  drain  the  funds  from  which  other  liabili- 
ties should  be  discharged.  The  new  system  of  New  York 
City  provided  a  pension  of  one  one-hundred-fortieth  of  the 
average  salary  of  the  last  ten  years  for  each  year  of  prior 
service  and  assumed  thereunder  a  liability  of  almost 
$16,655,000,  about  four-fifths  of  which  was  for  superannua- 
tion benefits  and  one-fifth  for  disability.1  It  made  a  provision 
for  their  discharge  which  assured  the  solvency  of  the  fund. 
The  liabilities  on  account  of  pension  benefits  for  subse- 
quent services  of  "present  members"  represent  the  third  im- 
portant item  in  the  cost  of  a  sound  system.  The  scientific 
systems  in  this  country  have  divided  this  benefit  into  two 
parts :  one  called  "pension"  and  supported  by  the  contributions 
of  the  government,  and  the  other  called  "annuity"  and  sup- 
ported by  the  teachers  themselves.  The  liability  of  the  gov- 
ernment under  the  "pension"  part  of  the  benefits  is  shown 
separately  from  the  liability  assumed  by  the  teachers  toward 
their  own  annuity.  The  "pension"  liability  may  consist  of 
several  elements  according  to  the  benefits  which  are  provided. 
In  the  new  system  of  New  York  City  this  liability  was  esti- 
mated at  about  $36,000,000  and  its  elements  were  as  follows : 
superannuation  pensions  for  subsequent  services,  $28,404,000; 
disability  pensions  for  subsequent  services,  $7,176,000;  death 
benefits  of  six  months  salary  to  dependents  of  present  teachers 
who  die  after  becoming  eligible  for  a  pension,  $356,000.  To 
cover  the  cost  of  these  benefits  and  the  liabilities  involved 
thereunder,  a  special  contribution  was  devised. 

An  actuarial  balance  sheet  does  not  show  the  liabilities 
which  will  appear  on  account  of  the  new  (or  future)  entrants 
to  the  service.  However,  the  cost  of  their  benefits,  as  already 
stated,  is  carefully  calculated  and  a  provision  is  made  for 
adequate  contributions  to  be  made  currently  by  them  and  on 
their  behalf  into  a  reserve  fund  during  their  active  service. 

'$13,405,700  for  superannuation  and  $3,249,200  for  disability. 

114 


DETERMINING  THE  COST  OF  BENEFITS 

These  contributions  are  not  used  for  the  discharge  of  any 
other  except  their  own  liabilities.  Thus,  in  admitting  new 
members  and  assuming  new  liabilities  the  system  at  the  same 
time  receives  an  equivalent  item  of  new  assets.  Its  continued 
solvency  is  thus  assured. 

Certain  other  liabilities  may  be  involved  in  a  system,  such 
as  those  connected  with  the  cost  of  administration  of  the 
system,  the  maintenance  of  a  certain  rate  of  interest,  and 
the  guarantee  of  the  solvency  of  the  system.  Their  nature  is 
described  in  the  chapter  on  the  contributions  of  the  govern- 
ment, in  which  the  various  forms  of  contributions  and  methods 
of  covering  the  different  liabilities  here  indicated  are  dis- 
cussed. 

Cost  and  Liabilities  Involved  under  Different  Benefits. 

A  considerable  difference  in  the  cost  of  benefits  and  the  amount 
of  liabilities  of  the  system  may  result  from  an  apparently 
slight  change  in  the  nature,  amount  and  conditions  of  benefits 
to  be  granted.  Great  caution  must,  therefore,  be  exercised 
in  this  matter.  The  following  may  serve  as  an  illustration. 
The  old  fund  of  New  York  City  provided  after  30  years  of 
service  a  pension  of  one-half  of  the  final  salary  of  the  teacher. 
The  liability  under  this  benefit  to  teachers  in  the  service  on 
June  30,  1914,  was  estimated  at  $49,643,000.  The  city  pro- 
posed to  raise  the  requirements  and  reduce,  the  pension  as 
follows:  retirement  at  age  65  on  a  pension  of  one-eightieth 
of  the  average  salary  of  last  ten  years  for  each  year  of  service. 
The  liability  under  this  benefit  was  estimated  to  be  only 
$40,862,000.  A  cut  of  $9,000,000  would  have  been  effected 
had  this  change  of  benefit  been  adopted.  As  the  teachers 
objected  to  such  provision,  a  compromise  scheme  was  sug- 
gested according  to  which  retirement  would  take  place  after 
35  years  of  service  on  a  pension  of  one-seventieth  of  the 
average  salary  of  the  last  ten  years  for  each  year  of  service. 
This  benefit  involved  a  liability  of  $46,806,000,  i.  e.,  about 
three  millions  less  than  the  cost  of  the  benefit  then  provided, 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

but  six  millions  more  than  the  benefit  proposed  by  the  city 
would  have  cost. 

In  deciding  upon  the  nature  of  benefits  to  be  provided 
and  the  contingencies  to  be  covered,  the  framers  of  a  system 
must  have  before  them  estimates  of  the  cost  and  liabilities 
involved  under  various  benefits,  because  otherwise  they  may 
provide  such  costly  superannuation  benefits  as  will  leave  no 
resources  for  making  adequate  provision  against  other  con- 
tingencies. A  better  proportion  between  the  provisions  against 
different  contingencies  may  be  established  if  the  cost  of  the 
different  provisions  is  known.  It  is  interesting  to  compare 
the  old  system  in  New  York  with  that  proposed  in  1916  with 
reference  to  the  distribution  of  their  cost  as  between  different 
benefits;  for  while  the  total  costs  of  these  two  systems  were 
about  equal  (approximately  $70,000,000),  the  distribution  of 
the  costs  was  different.  The  old  system  provided  exceedingly 
high  and  costly  superannuation  and  disability  benefits  and 
at  the  same  time  provided  no  withdrawal  benefits  whatsoever 
in  case  of  resignation  or  dismissal,  or  to  the  dependents  in 
case  of  death.  The  proposed  plan  reduced  the  superannuation 
and  disability  benefits  to  a  more  reasonable  rate  and  thus 
effected  a  saving  of  about  $5,000,000,  which  it  applied  to  the 
providing  of  withdrawal  benefits  for  the  cases  of  resignation, 
dismissal  or  death,  i.  e.,  of  benefits  which  are  of  value  especially 
to  the  younger  teachers. 


116 


CHAPTER  VII 

THE    DIVISION    OF    COST    BETWEEN    GOVERN- 
MENT AND  TEACHERS 

So  long  as  the  opinion  prevails  that  a  contribution  of  i  per 
cent  or  2  per  cent  is  sufficient  to  provide  retirement  benefits, 
the  question  as  to  who  shall  pay  it  is  comparatively  unim- 
portant, because  the  teachers  and  the  local  or  state  govern- 
ment are  not  opposed  to  contributing  it.  Sometimes  the 
teacher  assumes  the  payment  of  such  contribution  without  thq 
assistance  of  the  government,  at  other  times  the  government 
undertakes  to  pay  it  alone.  At  most  times,  however,  the 
teachers  and  the  government  divide  the  small  contribution 
between  themselves. 

The  "easy-going"  attitude  of  the  teachers  and  the  govern- 
ment towards  contributing  changes,  however,  as  soon  as  the 
high  cost  of  retirement  systems  is  realized  and  higher  con- 
tributions required.  When  a  deficiency  in  one  of  these  funds 
appears,  the  teachers  demand  that  the  government  shall  cover 
the  deficiency  and  contribute  at  a  higher  rate,  whereas  the 
government  seeks  to  increase  the  contributions  of  the  teachers. 
When  a  reliable  investigation  of  the  cost  of  a  sound  retire- 
ment system  discloses  the  fact  that  it  requires  a  contribution 
in  excess  of  10  per  cent  of  salaries  (including  the  deficiency), 
the  question  of  division  of  that  cost  becomes  of  paramount 
importance.  The  cost  is  too  great  to  be  borne  either  by  the 
teachers  alone  or  by  the  government  alone. 

After  some  consideration  it  becomes  apparent  that  the  cost 
must  be  divided  between  the  two  parties.  Here  the  difficul- 
ties begin,  for  each  party  seeks  to  assume  a  smaller  portion 

117 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

of  the  cost.  The  teachers  frequently  may  agree  to  contribute 
an  additional  i  or  possibly  2  per  cent  of  salaries,  but  they 
object  to  contributing  more.  On  the  other  hand,  the  govern- 
ment may  agree  to  relieve  the  teachers  of  the  payment  of 
the  entire  or  the  major  part  of  the  deficiency  with  respect  to 
previous  services  which  often  amounts  to  millions  of  dollars,1 
but  it  frequently  refuses  to  assume  any  considerable  part  of 
the  cost  with  respect  to  future  services. 

The  discussion  of  specific  terms  of  the  division  of  cost 
gains  a  great  deal  in  clearness,  and  an  agreement  is  sooner 
effected  if  the  philosophy  of  each  of  the  methods  or  systems 
mentioned  is  understood.  In  order  to  facilitate  such  an  under- 
standing a  brief  discussion  of  the  philosophy  of  each  of  these 
methods  is  herewith  presented. 

The  Wholly  Contributory  System.  Some  teachers  pre- 
fer the  wholly  contributory  system  because  it  assures  them 
greater  control  over  their  fund.  There  remains,  however, 
the  opposing  argument  that  it  imposes  a  burden  which  the 
teachers  are  not  able  to  bear.  This  argument  bears  with  dif- 
ferent force  upon  those  who  are  in  service  at  the  time  of  the 
establishment  of  the  system  —  the  so-called  "present  teachers," 
—  and  those  who  enter  later  —  the  "future  (or  new)  entrants." 
Upon  the  former  the  high  cost  is  most  keenly  felt,  for  if  con- 
tributions be  determined  upon  a  proper  actuarial  basis,  that 
is,  graduated  according  to  age,  the  periodical  sums  to  be  paid 
by  the  older  members  are  necessarily  very  large.  Even  in 
the  case  of  the  younger  members  it  is  necessary  to  exact  sums 
in  excess  of  5  per  cent  of  their  salaries;  whereas,  in  the  case 
of  the  older  teachers,  this  percentage  must  rise  as  high  as 
25  per  cent  or  even  50  per  cent  ;  and,  in  the  case  of  the  very 
old  teachers,  the  contributions  would  need  to  be  actually  more 
than  100  per  cent  of  their  current  salaries. 

As  applied  to  new  entrants  the  wholly  contributory  system 


deficiency  in  the  New  York  City  fund  was  estimated  in  1915  at 
$56,000,000. 

118 


DIVISION  OF  COST 

is  not  so  clearly  impracticable  and  is  indeed  feasible,  though 
there  would  still  remain  the  necessity  of  graduating  contri- 
butions according  to  the  respective  ages  of  the  entrants.  In 
practice,  however,  it  is  not  practicable  to  establish  a  system 
to  include  only  those  persons  who  may  thereafter  join  the 
teaching  force,  leaving  the  then  existing  force  unprovided 
for,  or  to  be  taken  care  of  by  a  system  of  government  aid. 
The  result  would  be  that  while  the  new  entrants  were  meeting 
the  entire  expenses  of  the  retirement  systems,  their  colleagues 
would  have  their  fund  in  part  supplied  from  the  public  purse. 
This  would  be  equitable  only  if  the  new  entrants  were  in 
receipt  of  proportionately  higher  salaries.  This  device,  how- 
ever, has  never  been  tried,  the  objections  to  it  being  clearly 
apparent. 

In  effect,  then,  it  may  be  said  that  the  wholly  contributory 
system  is  impracticable. 

The  Non-Contributory  System.  The  older  as  well  as  the 
younger  teachers  favor  the  non-contributory  system,  but  for 
different  reasons.  The  older  teacher  is  greatly  interested  in 
retirement  benefits  from  which  he  expects  soon  to  benefit  and 
which  he  regards  as  deferred  payments  for  faithful  public 
service.  The  younger  teacher  is  not  so  much  interested  in 
the  matter  and  desires  to  use  his  entire  salary  for  his  immedi- 
ate needs  or  wants,  and,  if  provision  is  to  be  made  for  pen- 
sions after  superannuation,  is,  therefore,  inclined  to  insist 
that  it  be  provided  by  the  government,  and  thus  to  join  hands 
with  the  older  teachers  upon  whom  a  contributory  system 
would  impose  a  very  heavy  burden. 

The  objections,  however,  to  the  wholly  non-contributory 
system  are  several  in  number  and  of  weight. 

In  the  first  place,  it  almost  necessarily  means  a  system  over 
whose  management  and  specific  provisions  the  teachers  them- 
selves are  given  little  or  no  control,  for  it  is  not  to  be  expected 
that  the  government  which  bears  its  entire  cost  will  be  willing 

119 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

to  surrender  its  management  and  direction.  The  result  from 
this  is  that  those  features  are  emphasized  which  the  govern- 
ment, as  the  employer,  deems  of  primary  importance  to  the 
public  service,  as  distinguished  from  those  features  which 
have  immediate  regard  to  the  personal  welfare  of  the  teachers 
themselves.  Thus,  for  example,  under  non-contributory  sys- 
tems, benefits  at  resignation  or  dismissal  which  are  essential 
to  the  freedom  of  the  teachers  are  not  usually  provided  for, 
and  the  supervising  authority  is  able  to  hold  over  the  heads 
of  his  employees  the  threat  of  a  forfeiture  of  all  benefits  in 
case  of  resignation  or  dismissal. 

The  further  argument  can  be  made  against  non-contributory 
systems  that  they  eventually  become  contributory  systems 
but  in  a  disguised  form,  and  one  under  which  the  burden  is 
shifted  to  an  inequitable  degree  upon  the  younger  members. 
This  change  is  brought  about  by  the  granting  of  an  increasing 
number  of  gratuities  with  a  result  that,  to  meet  their  cost, 
salaries  are  lowered  or  at  least  prevented  from  being  increased. 
The  experience  of  the  British  Civil  Service  which  has  a  non- 
contributory  system  supports  this  view. 

Germany  still  maintains  a  non-contributory  system  for  its 
teachers,  but  it  is  worthy  of  note  that  all  of  its  systems  of 
social  insurance — for  old  age,  sickness,  invalidity,  death,  etc. — 
are  founded  upon  the  contributory  principle. 

Regarded  from  the  standpoint  of  the  government,  the 
objection  to  the  non-contributory  system  is  of  course  that  it 
makes  a  heavy  demand  upon  the  public  purse. 

In  general,  it  may  be  said  that  when  we  view  pension  sys- 
tems generally,  at  home  as  well  as  abroad,  the  tendency  to 
abandon  the  non-contributory  principle  is  clearly  apparent. 
The  objections  to  its  use  are  too  great  to  be  successfully 
overcome. 

The  Joint  or  Partly  Contributory  System.     Sound  finan- 
cial  as   well   as   social   considerations   support   the   principle 

1 20 


DIVISION  OF  COST 

that  the  teachers  and  the  government  should  unite  in  support 
of  retirement  systems.  As  earlier  shown,  the  philosophy 
of  all  pension  systems  for  public  employees  is  founded  upon 
the  fact  that  there  is  a  community  of  interest  between  the 
public,  which  is  the  employer,  and  the  prospective  beneficiaries, 
who  are  the  employees.  That  is,  the  welfare  of  the  latter 
makes  it  possible  to  build  up  a  more  efficient  administrative 
force,  to  establish  a  better  cooperation  and  maintain  an  im- 
proved esprit  de  corps.  And,  as  experience  shows,  where  the 
management  of  the  system  is  divided  between  the  government 
and  the  members  of  the  system,  more  cordial  and  better  work- 
ing methods  are  maintained. 

A  clearer  distinction  between  the  question  of  wages  and  of 
pensions  is  also  promoted.  The  contributions  by  the  members 
of  the  system  are  not  viewed  by  them  as  pro  tanto  reductions 
of  their  wages,  nor  are  the  pensions  regarded  by  the  govern- 
ment as  gratuities  upon  its  part.  In  other  words,  the  pensions 
paid  are  seen  to  be  partly  personal  savings  and  partly  deferred 
payments  for  services  rendered.  As  thus  viewed,  it  becomes 
feasible  to  make  adequate  provision  for  their  permanent  pay- 
ment. The  funds  can  be  drawn  from  a  double  source  and  the 
payments  for  their  replenishment  equitably  apportioned. 

In  submitting  the  first  reorganization  scheme  prepared  by 
the  New  York  City  Commission  on  Pensions,  Mr.  Bruere,  the 
Secretary  of  the  Commission,  wrote : 

It  would  be  easy  to  submit  for  the  consideration  of  authori- 
ties and  taxpayers  generous  pension  plans  which  place  the 
entire  cost  upon  the  city.  It  does  not  require  much  wisdom 
to  appreciate  the  folly  of  such  a  course.  Not  only  would  the 
immediate  cost  be  burdensome,  but  it  would  presently  become 
so  onerous  that  unquestionably  benefits  would  be  curtailed. 

If  it  be  to  the  interest  of  the  city  that  provision  be  made 
for  the  retirement  of  superannuated  employees,  it  is  of  greater 
interest  to  the  employees  themselves  who  are  the  beneficiaries 
of  the  retirement  plan.  But  merely  from  self-interest,  and 
without  regard  to  questions  of  propriety  and  justice,  em- 
ployees should  welcome  any  means  which  will  ensure  the 

121 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

permanency  of  a  plan  established,  and  remove  from  the  possi- 
bility of  doubt  their  receipt  of  pensions  when  the  time  comes 
for  them  to  claim  them. 

With  these  considerations  in  view  the  plan  suggested  in 
this  report  for  reorganizing  the  teachers'  retirement  fund 
places  equally  upon  the  teachers  and  the  city,  with  one  qualifi- 
cation in  favor  of  the  teachers,  later  discussed,  the  cost  of 
future  benefits.  The  cost  of  these  future  pensions  will  be  con- 
siderable if  they  are  to  be  as  adequate  as  they  should  be  from 
the  standpoint  of  efficiency  and  humanity. 

In  summary,  then,  we  arrive  at  the  following  conclusions : 

The  wholly  contributory  system  is  financially  impracticable 
and  founded  upon  an  inadequate  pension  philosophy,  since  it 
has  regard  only  for  the  welfare  of  the  pensioners  to  the 
exclusion  of  the  social  and  administrative  interests  that  are 
involved. 

The  non-contributory  system  also  is  financially  impracti- 
cable; is  inequitable  as  between  the  older  and  younger  mem- 
bers; excludes  the  beneficent  savings  principle  upon  the  part 
of  the  members ;  tends  to  disregard  certain  desirable  forms 
of  relief,  and  leads  to  autocratic  methods  of  operation. 

The  joint  contributory  system  is  financially  feasible;  it  can 
be  so  organized  and  operated  as  to  distribute  costs  equitably 
as  between  the  public  and  the  members,  and  between  the  dif- 
ferent groups  of  members;  it  provides  the  various  kinds  of 
benefits  that  are  needed;  it  harmoniously  combines  social 
insurance  with  individual  savings,  and  it  makes  possible  joint 
management  and  cordial  cooperation  between  the  members 
and  their  administrative  superiors. 

The  Division  of  Cost  between  Teachers  and  Govern- 
ment in  Existing  Systems.  The  table  on  the  following  page 
presents  in  summary  form  the  chief  facts  relative  to  the  divi- 
sion of  cost  between  the  teachers  and  the  government  in  exist- 
ing systems  in  this  country. 

122 


DIVISION  OF  COST 

DIVISION   OF   COST   BETWEEN   TEACHERS   AND   GOVERNMENT   IN   EXISTING 

SYSTEMS 

WHOLLY  CONTRIBUTORY  SYSTEMS  Number  of  Teachers  Covered 

Michigan  18,583 

New  Orleans,  La 1,294 

Louisville,  Ky 883 


Total 20,760 

NON-CONTRIBUTORY  SYSTEMS 

STATE  SYSTEMS 

Maine 6,965 

Maryland 4,277 

New  Hampshire  3,083 

Rhode  Island  1,484 

Arizona   1,539 


Total  Under  State  Systems 17,348 

LOCAL  SYSTEMS 

Pittsburgh,  Pa 2,405 

Denver,  Colo 1,095 

Atlanta,  Ga 795 

Charleston,  S.  C 157 

Columbus,  Ga 113 

Brookline,  Mass 196 


Total  Under  Local  Systems 4,761 

Total 22,109 

JOINT  OR  PARTLY  CONTRIBUTORY  SYSTEMS 

With  the  exception  of  the  foregoing  systems,  all  the  systems  listed 
in  Appendix  2  are  of  the  joint  or  partly  contributory  type. 

Number  of  Systems  No.  of  Teach- 

RECAPITULATION                                     State      Local      Total  ers  Covered 

Wholly  contributory  systems        123  20,760 

Non-contributory   systems...         5              6            n  22,109 
Joint  or  partly  contributory 

systems  16           64           80  289,685 

22  72  94  332,554 

Special  attention  may  be  called  to  the  systems  in  operation 
in  Boston  and  the  state  of  New  Jersey.  The  teachers  in  each 
of  these  systems  are  eligible  to  retirement  from  two  separate 
funds,  one  entirely  supported  by  salary  deductions,  the  other 
financed  exclusively  from  public  moneys.  The  combined 
operation  of  both  funds  is  similar  in  effect  to  a  single  con- 
tributory system  and  has  been  treated  as  such  in  the  fore- 

123 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

going  tabulation.1  A  similar  situation  exists  in  Rhode  Island, 
where  the  teachers  of  Providence,  Newport  and  Bristol  may 
receive  benefits  from  their  local  contributory  funds  and  at  the 
same  time  receive  pensions  from  the  non-contributory  system 
of  the  state. 

Out  of  the  twenty-four  systems  selected  for  special  study, 
only  Michigan  and  New  Orleans  are  of  the  wholly  contribu- 
tory type.  Maine,  Pittsburgh  and  Denver  are  non-contribu- 
tory, whereas  the  other  nineteen  systems  are  of  the  joint  or 
partly  contributory  type. 

The  joint  contributory  system  of  Massachusetts,  adopted 
in  1913,  is  worthy  of  special  note  because  of  the  high  rate 
fixed  for  the  contributing  of  the  teachers — 5  per  cent.  This 
rate,  which  is  higher  than  the  rate  in  any  other  system  in  this 
country,  "seems  to  meet  with  the  approval  of  practically  all 
the  members  of  the  Retirement  Association."2  The  state  con- 
tributes to  the  teacher's  retirement  benefit  an  amount  equal  to 
that  which  his  contributions  purchase,  and  in  addition  assumes 
payment  of  all  benefits  for  services  rendered  previous  to  the 
establishment  of  the  fund  (which  constitute  a  deficiency), 
without  requiring  any  back  contributions  on  the  part  of  the 
teachers.  The  state  thus  accepts  its  share  of  cost  although  on 
account  of  the  latter  payments  that  share  will  be  larger  than 
that  of  the  teachers. 

JThe  new  system  of  New  Jersey,  which  supersedes  the  two  old  sys- 
tems, is  of  the  joint  contributory  type. 

Massachusetts  Teachers'  Retirement  Board,  Bulletin  No.  2,  p.  6. 


124 


Determination  having  been  made  of  the  basis  on  which  the 
cost  of  the  pension  system  shall  be  divided  between  the  gov- 
ernment and  the  teachers,  special  questions  as  to  amount  and 
method  of  financing  arise  with  respect  to  the  contributions 
of  both  parties.  To  a  consideration  of  these  special  problems 
the  present  and  the  succeeding  chapters  are  devoted.  In  this 
chapter  are  considered  the  questions  involved  in  determining 
the  size  and  character  of  the  government's  contribution. 

Various  Elements  Determining  Amount  of  the  Govern- 
ment's Contribution.  Those  who  have  had  most  experience 
in  framing  scientific  pension  systems  make  a  careful  distinc- 
tion between  the  different  kinds  of  obligations  assumed  by 
the  government.  Each  of  these  types  of  obligation  involves 
special  features  which  must  be  given  weight  in  determining 
the  amount  which  the  government  shall  set  aside  from  year  to 
year  to  meet  these  obligations  as  they  mature.  The  govern- 
ment's contribution  is  therefore  to  be  regarded  as  the  com- 
posite of  several  different  contributions,  each  of  which  is  to 
be  constructed  in  accordance  with  the  nature  and  amount 
of  the  particular  liability  to  the  support  of  which  it  is  applied. 
The  elements  constituting  the  contribution  may  be  classified 
•  as  follows: 

1.  Contribution  supporting  an  already  existing  pension  roll. 

2.  Contribution  towards  the  pensions  of  present  members 
for  their  prior  services  (accrued  liabilities). 

3.  Contribution  towards  the  pensions  of  present  members 
for  their  subsequent  services. 

4.  Contribution  towards  future  pensions  of  new  entrants. 

125 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

5.  Contribution  towards  administrative  expenses. 

6.  Contribution  towards  the  maintenance  of  a  certain  rate 
of  interest  and  the  guarantee  of  the  solvency  of  the  system. 

Contribution  Supporting  an  Already  Existing  Pension 
Roll.  Where  an  old  system  is  discontinued  and  a  new  system 
introduced  in  its  place,  the  new  system  must  take  over  the 
pension  roll  of  the  former  and  devise  a  special  contribution 
from  which  the  old  pensions  can  be  paid.  The  peculiar  nature 
of  the  old  pension  roll  is  that  it  decreases  from  year  to  year 
as  the  old  pensioners  die.  In  New  York  City,  on  June  30, 
1914,  there  were  about  1,521  old  pensioners  and  the  annual 
pension  roll  aggregated  about  $1,185,000  and  represented  a 
total  liability  of  about  $11,600,000.  During  the  following 
four  years  about  150  pensioners  died  and  the  annual  pension 
roll  on  their  account  decreased  to  about  $1,070,000. 

Since  the  annual  payments  under  this  obligation  decrease, 
there  is  no  reason  for  providing  a  reserve  against  the  future 
payments  on  that  account.  The  contributions  can,  therefore, 
be  made  on  a  cash  disbursement  basis.  Accordingly  the  laws 
of  Massachusetts  and  New  York  City  provide  that  the  state 
or  city  authorities  shall  appropriate  each  year  the  amount 
necessary  for  the  payment  of  the  old  pensions  which  are  due 
that  year. 

Contribution  towards  Pensions  to  Present  Members  for 
Past  Services.  On  the  establishment  of  a  pension  system, 
as  pointed  out  in  a  preceding  chapter,  the  teachers  already 
in  the  service,  even  those  who  have  been  in  service  so  long  as 
to  make  their  retirement  imminent,  are  invariably  embraced 
in  the  benefits  of  the  system  without  any  previous  provision 
having  been  made  for  the  payment  of  those  benefits.  The 
problem  which  confronts  the  government  in  financing  "the 
accrued  liabilities"  which  are  thus  assumed — for  obviously 
the  teachers  themselves  cannot  afford  to  make  up  any  con- 
siderable part  of  the  deficiency — has  proved  perhaps  the  knot- 

126 


THE  GOVERNMENT'S  CONTRIBUTION 

tiest  of  all  the  problems  involved  in  the  establishment  of 
teachers'  pension  systems. 

The  total  amount  which  would  have  to  be  set  aside  to 
liquidate  at  once  the  "accrued  liabilities"  of  the  system  at  its 
inception  usually  approximates  or  exceeds  the  amount  of  the 
annual  payroll  of  the  active  teaching  force.  Since  it  is  im- 
practicable to  secure  a  fund  of  such  proportions  at  the  inaugu- 
ration of  the  system,  provisions  become  necessary  for  the 
amortization  of  the  initial  deficiency  with  compound  interest 
accumulations  on  the  unpaid  balances.  The  entire  deficiency, 
with  interest,  may  be  spread  over  a  number  of  years,  say  sixty 
or  seventy,  during  which  period  all  teachers  who  were  in 
the  system  at  the  time  of  its  establishment  would  have  left 
the  service  and  those  who  had  retired  would  have  passed 
away.  If  such  liquidation  is  made  in  instalments  of  equal 
amounts,  then  the  annual  charge  during  the  first  years  is  a 
heavier  burden  on  the  taxpayer  than  during  subsequent  years 
when  the  community  has  grown  and  is  better  able  to  stand  a 
heavy  financial  burden.  In  order  to  adjust  payments  to  the 
financial  ability  of  taxpayers,  the  amortization  of  the  de- 
ficiency may  thus  be  arranged  on  an  increasing  scale.  The 
"deficiency"  contribution  may  be  fixed  as  a  percentage  of  the 
payroll  of  the  active  force  which  will  result  in  larger  instal- 
ments as  the  personnel  and  salaries  increase.  The  time 
required  to  liquidate  the  initial  deficiency  will  also  be  corre- 
spondingly shortened. 

Up  to  a  certain  point  the  ascending  ,scale  of  deficiency  con- 
tributions exceeds  the  demands  on  the  deficiency  fund.  Each 
year,  as  the  present  members  retire,  a  portion  of  the  accrued 
liabilities  matures  for  payment.  The  payments  are  very  small 
at  first  but  rapidly  grow  from  year  to  year.  The  peak  of 
the  load  is  reached  perhaps  only  twenty-five  or  thirty  years 
after  the  establishment  of  the  system.  Then  the  annual  pay- 
ments to  present  members  on  account  of  accrued  liabilities 
will  begin  to  decrease,  though  they  will  cease  altogether  per- 

127 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

haps  only  some  seventy  years  hence  when  the  last  of  the 
present  members  dies. 

Various  methods  for  liquidating  the  "accrued  liabilities" 
deficiency  of  a  system  have  been  devised  in  this  country  and 
abroad.  In  some  systems  the  government  contributes  on  a 
cash  disbursement  basis,  in  others  the  contribution  is  made 
on  a  partial  reserve  basis,  and  in  the  third  a  still  further  step 
is  made  in  this  direction  as  the  government  contributes  on  a 
full  reserve  basis. 

One  of  the  simplest  methods  is  that  adopted  abroad  by 
Scotland  and  by  Massachusetts  and  Connecticut  in  this  coun- 
try. It  unloads  the  "accrued  liabilities"  of  the  fund  upon  the 
taxes.  The  fund  thus  has  no  deficiency  and  starts  with  a 
clean  slate.  The  state  provides  no  special  reserve  for  the 
discharge  of  the  accrued  liabilities,  but  pays  them,  as  they 
mature,  directly  from  the  taxes.  It  appropriates  each  year  an 
amount  sufficient  to  pay  the  "prior  service"  pensions  which 
are  due  that  year.  The  disadvantage  of  this  method  lies  in 
the  fact  that  the  load  is,  therefore,  unequally  distributed 
between  the  immediate  and  the  more  remote  future.  Further- 
more, the  aggregate  amount  contributed  by  the  government 
during  the  entire  period  of  sixty  or  seventy  years,  during 
which  the  accrued  liabilities  would  be  paid,  is  considerably 
larger  than  it  would  have  been  had  it  been  made  on  a  reserve 
basis  and  had  it  been  earning  interest. 

Another  method,  adopted  in  London  and  considered  but 
rejected  in  New  York  City,  consists  in  paying  to  the  fund  each 
year  only  the  interest  on  the  deficiency.  Thus,  while  the 
deficiency  is  not  being  discharged  it  is  at  least  prevented  from 
increasing.  The  disadvantage  of  this  method  lies  in  the 
perpetuation  of  the  indebtedness  of  the  government  .and  the 
constant  payment  of  interest. 

A  third  method  is  adopted  in  New  York  City.  The  city 
discharges  the  accrued  liabilities  on  a  combined  "cash  dis- 
bursement" and  "partial  reserve"  basis.  It  appropriates  each 

128 


THE  GOVERNMENT'S  CONTRIBUTION 

year  the  amount  necessary  to  pay  the  "prior  service"  pensions 
which  are  due  that  year,  and,  furthermore,  appropriates  each 
year  an  additional  amount  with  which  it  sets  up  a  partial 
reserve  against  the  future  increases  of  payments  on  account 
of  the  "prior  service"  pensions.  The  partial  reserve  helps 
the  government  to  carry  the  peak -of  the  load  in  the  proximate 
future  and  reduces  the  high  appropriations  on  that  account 
which  would  otherwise  be  necessary.  A  contribution  towards 
a  partial  reserve  presents,  therefore,  a  distinct  advantage. 

The  fourth  method  originated  in  Liverpool  and  was  recom- 
mended by  the  New  York  City  Pension  Commission  in  1916. 
It  consists  in  discharging  the  deficiency  by  means  of  equal 
annual  instalments  over  a  period  of  sixty  years.  Each  year 
the  government  pays  into  the  fund  the  same  amount  of  an 
"accrued  liability"  (or  "deficiency")  contribution.  The  ad- 
vantage of  this  method  is  that  each  year's  taxes  carry  the 
same  load,  and  the  interest  on  the  "accrued  liability"  contri- 
bution considerably  reduces  the  cost  of  discharging  the 
deficiency. 

Finally,  a  fifth  method  is  that  recently  adopted  in  Pennsyl- 
vania. According  to  this  method  the  "accrued  liability  con- 
tribution" is  not  of  a  fixed  amount  but  a  fixed  percentage  of 
the  payroll.  Naturally,  the  payroll  grows  as  the  community 
increases  and,  therefore,  the  amount  of  the  deficiency  con- 
tribution will  increase  at  the  same  rate.  The  entire  deficiency 
can  thus  be  discharged,  without  much  hardship,  in  a  much 
shorter  period  than  sixty  years. 

Contribution  towards  Pensions  to  Present  Members  on 
Account  of  Future  Services.  The  liabilities  to  present  mem- 
bers on  account  of  their  subsequent  services  may  present  a 
no  less  considerable  item  than  the  accrued  liabilities.  Thus, 
for  example,  at  the  reorganization  of  the  New  York  City 
system  they  amounted  to  about  $36,000,000  as  against  about 
$17,000,000  of  accrued  liabilities.  The  problem  of  meeting 
them  is  also  a  difficult  one. 

129 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Like  accrued  liabilities,  these  liabilities  mature  only  gradu- 
ally. Only  a  few  "subsequent  service"  pensions  become  pay- 
able at  first,  and  the  payments  on  that  account  are  far  smaller 
than  those  on  account  of  "prior  service"  pensions.  The  pen- 
sions during  the  first  year  or  two  represent  almost  entirely 
"prior  service"  (i.  e.  an  accrued  liability)  and  almost  no  "sub- 
sequent service."  With  each  further  year  the  new  pensioners 
have  on  the  average  one  year  more  of  subsequent  service  and 
one  year  less  of  prior  service  to  their  credit.  The  retirements 
granted  fifteen  or  twenty  years  hence  may  represent  on  the 
average  an  equal  amount  of  prior  and  subsequent  services 
Thus,  the  payments  on  account  of  the  latter  follow  close  on  the 
heels  of  the  maturing  accrued  liabilities.  If  the  peak  of  the 
load  of  accrued  liabilities  is  reached  perhaps  twenty-five  years 
hence,  the  peak  of  the  load  on  account  of  subsequent  services 
will  be  reached  perhaps  fifteen  or  twenty  years  thereafter. 

The  form  and  to  a  certain  extent  the  rate  of  the  govern- 
ment contribution  depends  on  the  basis  on  which  it  is  made. 
If  it  is  made  on  a  cash  disbursement  basis,  as  for  example 
in  Massachusetts  and  Connecticut,  the  rate  of  contribution 
is  far  below  the  normal  cost  of  the  benefits  in  the  beginning 
but  will  be  far  above  the  normal  cost  some  thirty  or  forty 
years  hence,  and  the  aggregate  amount  so  contributed  by  the 
government  on  account  of  the  present  members  during  their 
lives  will  be  far  above  the  amount  which  it  would  have  been 
called  upon  to  contribute  on  a  partial  or  full  reserve  basis. 
If  the  government  contributes  towards  a  partial  reserve,  as, 
for  example,  in  New  York  City,  besides  discharging  the 
maturing  obligations  on  a  cash  disbursement  basis,  it  will 
slightly  increase  its  present  light  load  but  reduce  its  future 
heavy  burden. 

Of  the  various  forms  of  contributions  made  on  a  full  reserve 
basis  the  following  two  may  be  noted.  Under  one  form,  the 
government  contributes  on  account  of  each  member  and  dur- 
ing his  entire  service  a  certain  percentage  of  his  salary,  that 

130 


THE  GOVERNMENT'S  CONTRIBUTION 

percentage  being  fixed  in  accordance  with  his  age;  under 
the  other  form,  the  government  contributes  a  certain  constant 
percentage  of  the  entire  payroll  for  a  certain  period  of  years 
until  the  entire  liability  is  liquidated.  The  advantage  of  the 
first  form  of  contribution,  which  was  proposed  in  1916  in 
the  reorganization  plan  of  the  New  York  City  fund,  lies  in 
the  fact  that  an  individual  reserve  is  created  for  every  member 
and  that  the  government  contributes  on  his  account  just  as 
long  as  he  stays  in  the  active  service.  The  advantage  claimed 
for  the  other  form,  which  was  adopted  by  Pennsylvania,  is 
that  it  is  simple,  that  it  bears  the  same  ratio  each  year  to  the 
entire  payroll  instead  of  a  decreasing  ratio  as  does  the  other 
form  of  contribution,  and  that  the  exact  period  during  which 
the  liability  will  be  liquidated  depends  on  the  growth  of  the 
payroll. 

If  the  same  method  of  contributing  is  adopted  for  dis- 
charging liabilities  towards  present  members  for  both  past 
and  future  services,  then  the  contributions  on  that  account 
may  be  consolidated  into  one.  Thus,  for  example,  Massa- 
chusetts and  Connecticut  appropriate  each  year  an  amount 
sufficient  to  pay  all  pensions  that  are  due  that  year  both  on 
account  of  prior  and  subsequent  services;  New  York  City 
appropriates  each  year  one  million  dollars  which  is  applied 
to  the  creation  of  a  partial  reserve  against  both  accrued  lia- 
bilities and  subsequent  services;  and  Pennsylvania  contributes 
semi-annually  2.8  per  cent  of  the  annual  payroll  (i.  e.  about 
5.6  per  cent  of  salary  annually)  with  a  view  to  building  up 
a  full  reserve  against  the  total  liability  towards  its  present 
members. 

On  the  other  hand,  the  systems  applying  different  methods 
to  the  discharge  of  the  two  kinds  of  liability,  require  of  the 
government  two  kinds  of  contributions :  in  the  Liverpool 
system,  the  first  has  been  called  an  "accrued  liability"  con- 
tribution, whereas  the  second  has  been  termed  a  "current" 
or  "normal"  contribution. 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  forms  of  "partial"  and  "full  reserve"  contributions 
here  described  represent  the  first  experimental  steps  along 
lines  of  equitable  distribution  of  the  "deficiency"  and  "normal" 
obligations  towards  the  "present  members"  of  a  scientifically 
constructed  system.  New  forms  of  partial  and  full  reserve 
contributions  will  undoubtedly  be  introduced  in  the  future. 
They  will  further  develop  the  fundamental  principle  that  the 
contribution  should  be  so  devised  as  to  liquidate  the  particular 
obligation  in  the  most  economical  way  to  the  state  or  city 
employer,  and  at  the  same  time  to  assure  the  greatest  solvency 
and  permanency  of  the  system. 

Contribution  towards  Pension  Benefits  of  New  Entrants. 
The  liabilities  on  account  of  pension  benefits  to  new  en- 
trants are  of  an  increasing  nature.  This  may  be  illustrated 
by  the  following  simple  case.  At  the  time  of  establishment 
of  the  system  there  are  no  new  entrants  and  the  liability  on 
their  account  will  be  nil.  If  a  thousand  teachers  enter  the 
service  each  year  and  if  the  "pension"  liability  for  each  new 
entrant  averages  $1,000,  the  total  "pension"  liability  on  their 
account  will  amount  to  $1,000,000  at  the  end  of  the  first  year, 
$2,000,000  at  the  end  of  the  second  year,  $3,000,000  on  the 
third  year,  and  it  thus  will  grow  from  year  to  year.  Perhaps 
none  of  the  new  entrants  will  be  placed  on  the  "pension"  roll 
for  the  first  ten  or  fifteen  years  and  the  first  payments  will 
be  very  small.  However,  once  the  payments  begin  they  will 
grow  at  an  accelerating  rate.  Provision  should,  therefore, 
be  made  in  advance  against  the  future  increases  in  the  lia- 
bilities and  the  annual  "pension"  payments  to  new  entrants. 
The  contribution  supporting  their  future  "pension"  benefits 
should  be  made  on  a  reserve  basis:  each  year  from  the  time 
of  appointment  of  the  new  entrant  the  government  must  set 
aside  such  a  percentage  of  salary  as  will  be  sufficient,  together 
with  interest,  to  accumulate  a  reserve  which  will  provide  the 
"pension"  benefits.  It  is  the  most  economical  contribution 
for  the  employer,  for  it  involves  a  comparatively  small  imme- 

132 


THE  GOVERNMENT'S  CONTRIBUTION 

diate  expense,  because  the  new  entrants  are  not  numerous 
in  the  beginning,  they  have  no  prior  services  and  do  not 
present  a  deficiency  as  do  the  other  members,  and  they  are 
young  and  require,  therefore,  only  a  very  low  rate  of  con- 
tributions. It  is  the  most  desirable  form  of  contribution  from 
the  point  of  view  of  the  new  entrants,  because  a  "reserve" 
is  being  set  up  by  the  government  which  serves  as  a  guarantee 
that  their  remote  benefits  will  be  paid.  Thus,  more  than 
any  other  contribution  it  assures  the  permanency  of  the  system. 

The  states  of  Massachusetts  and  Connecticut  make  no  ad- 
vance provision  whatsoever  for  new  entrants  except  to  pay 
their  "pension"  benefits  as  they  mature.  The  time  when  the 
first  contribution  on  account  of  new  entrants  will  be  made 
is  practically  postponed  twenty  years.  It  will  then  begin  on 
a  cash  disbursement  basis  with  the  result  that  the  annual 
payments  on  that  account  will  thereafter  rapidly  increase  from 
year  to  year  and  the  permanent  operation  of  the  system  may 
be  endangered. 

The  city  of  New  York  and  the  state  of  Pennsylvania  con- 
tribute on  a  reserve  basis  with  respect  to  new  entrants.  The 
contribution  is  fixed  at  such  a  percentage  of  salary  as  is 
sufficient  to  provide  "pension"  benefits  to  all  those  who  accord- 
ing to  actuarial  estimates  will  remain  in  the  service  until 
retirement.  The  number  of  those  who  will  withdraw  from 
the  service  before  retirement,  through  resignation,  dismissal 
or  death,  is  discounted  in  advance,  and  no  contributions  are 
made  on  their  account.  This  arrangement  considerably  re- 
duces the  rate  of  contribution  and  results  in  an  immediate 
economy  for  the  government. 

Contribution  towards  Administrative  Expense.  The  ad- 
ministrative expense  of  any  system  is  in  the  nature  of  a 
current  expenditure  and  should,  therefore,  be  made  on  a 
cash  disbursement  basis.  As  it  may  vary  considerably  from 
year  to  year,  the  scientific  systems  here  discussed  have  pro- 
vided that  each  year  the  legislature  shall  appropriate  the 

133 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

amount  which  has  been  estimated  as  necessary  for  meeting 
the  probable  expenditures  of  the  ensuing  year. 

Contribution  towards  the  Maintenance  of  the  Guaran- 
teed Rate  of  Interest  and  Solvency  of  the  System.  The 
framers  of  a  system  may  find  it  desirable  that  the  government 
should  guarantee  a  certain  rate  of  interest  so  as  to  assure 
the  system  against  a  sudden  fall  in  the  interest  rate  realized 
on  its  investments,  or  that  it  should  guarantee  to  cover  any 
other  deficiency  which  may  develop.  The  systems  of  Massa- 
chusetts and  Connecticut  do  not  guarantee  any  rate  of  interest 
on  the  contributions  of  the  members  of  the  system.  They 
credit  such  interest  to  the  individual  accounts  as  has  been 
actually  earned  on  the  investments  during  the  year.  The  rate 
of  interest  realized  during  the  year  may  be  very  low,  and  yet 
the  state  will  not  need  to  contribute  on  that  account.  Quite 
different  is  the  situation  in  the  system  of  New  York  City. 
The  law  guarantees  4  per  cent  of  interest  on  the  teachers' 
contributions.  If  the  interest  actually  earned  falls  below  this 
rate,  the  city  must  cover  the  deficiency.  The  soundest  method 
probably  is  to  cover  the  deficiency  during  the  year  it  occurs. 
The  city  can  thus  contribute  on  that  account  on  a  cash  dis- 
bursement basis. 

In  case  the  government  guarantees  the  solvency  of  the 
system,  it  may  be  called  upon  to  contribute  on  account  of 
any  deficiency  which  may  appear.  Thus,  for  example,  under 
the  system  of  New  York  City,  the  city  guarantees  that  "in  no 
case  shall  such  annuity  be  less  for  each  one  hundred  dollars 
of  accumulated  deductions  of  a  present-teacher  at  the  time 
of  retirement  than  is  shown  in  the  following  schedule."  If 
the  actual  rate  of  mortality  among  the  teachers  should  be 
lower  than  the  one  assumed,  then  a  deficiency  will  appear 
which  the  city  will  have  to  cover.  It  may  be  necessary  to 
devise  a  special  contribution  which  will  discharge  the  de- 
ficiency on  a  reserve  basis  during  a  period  of  years.  The 
problem  will  be  to  devise  such  a  form  of  a  "deficiency"  con- 

134 


THE  GOVERNMENT'S  CONTRIBUTION 

tribution  as  will  be  most  economical  under  the  particular 
conditions. 

Coordinating  the  Various  Elements  of  the  Contribution. 
The  form  and  rate  of  each  element  of  the  government  con- 
tribution must  be  so  devised  as  not  only  to  be  most  appropriate 
for  meeting  the  particular  liability,  but  also  to  harmonize 
with  the  other  elements  of  its  contribution.  The  problem  is 
one  of  coordinating  all  the  component  parts  in  such  a  way  as 
to  make  the  whole  contribution  most  economical  for  the  gov- 
ernment with  regard  to  both  its  present  and  future  burdens, 
and  also  most  effective  in  so  far  as  the  solvency  of  the  system 
is  concerned.  An  illustration  of  this  is  afforded  by  the  cases 
of  the  new  systems  of  New  York  City  and  Pennsylvania. 
The  former  was  launched  with  the  load  of  an  already  existing 
pension  roll  which  required  on  its  part  an  immediate  annual 
contribution  of  a  million  dollars.  Under  such  abnormal  con- 
ditions the  city  could  not  afford  to  contribute  on  a  full  reserve 
basis  on  account  of  the  present  active  members,  and  the 
"partial  reserve"  was  probably  more  economic.  While  the 
annual  appropriations  for  the  payment  of  new  pensions  will 
increase,  the  annual  appropriations  on  account  of  the  old 
pensions  will  decrease.  The  Pennsylvania  system  started 
under  quite  different  conditions,  for  it  did  not  find  an  already 
existing  pension  roll  which  it  had  to  carry.  In  view  of  the 
absence  of  this  element  of  contribution  it  could  well  afford 
to  contribute  on  a  full  reserve  basis  on  account  of  its  present 
members. 

Despite  the  need  for  precise  actuarial  computation  and  for 
careful  fiscal  examination  which  the  foregoing  discussion 
shows  to  be  indispensable  if  the  amount  of  the  government's 
contribution  is  to  be  fixed  upon  a  sound  basis,  cities  and  states 
have  resorted  to  a  variety  of  unscientific  and  unsound  methods. 
The  chief  of  these  are  deserving  of  detailed  consideration. 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: The  Cash  Disbursement  Method.     From  the 

135 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

nature  of  the  case,  as  well  as  from  a  review  of  the  considera- 
tions developed  in  the  preceding  section  with  regard  to  the 
varying  rates  at  which  the  several  types  of  liability  to  be  met 
by  the  government  mature,  it  would  seem  too  plain  to  need 
argument  that  the  only  fair  and  sound  method  of  financing 
the  major  elements  in  the  government's  contribution  is  to  set 
up  a  reserve  to  which  contributions  may  be  made  before  the 
liabilities  have  begun  to  mature  in  quantity.  Despite  the 
obvious  wisdom  of  this  principle,  in  not  a  few  systems  the 
government  still  attempts  to  provide  its  contribution  by  the 
cash  disbursement  of  the  sums  currently  required.  This 
method  is  found  in  the  state  system  of  New  Jersey  and 
in  a  number  of  other  non-contributory  systems.1  Their  statutes 
provide  that  the  government  must  appropriate  each  year  an 
amount  sufficient  to  pay  the  pensions  of  that  year. 

Systems  of  the  "cash  disbursement"  type  are  almost  invari- 
ably unsound  for  the  reason  that  at  their  establishment  the 
future  growth  of  the  pension  claims  is  either  greatly  underesti- 
mated or  not  anticipated  at  all.  The  requirements  of  the  system 
are  very  small  at  the  beginning,  but  the  government  contribu- 
tion rapidly  increases  until  it  considerably  exceeds  the  normal 
cost  of  the  system.  The  generation  of  taxpayers,  which  is  re- 
sponsible for  the  establishment  of  the  system,  escapes  with  a 
comparatively  light  contribution,  whereas  future  generations 
have  to  bear  the  great  bulk  of  the  cost  and  contribute  at  much 
higher  rate  than  they  would  have  contributed  on  a  reserve 
basis  and  under  a  different  form  of  contribution.  Each  suc- 
ceeding generation  undergoes  a  relatively  heavier  and  entirely 
unexpected  strain. 

As  soon  as  such  strain  exceeds  the  limits  of  financial  sacri- 
fice which  the  public  is  willing  to  bear,  relief  is  sought  by 
levying  assessments  on  the  teachers,  or,  where  they  are  already 
exacted,  by  increasing  the  rate  of  contribution,  by  reductions 
in  the  scale  of  benefits,  by  changes  in  retirement  conditions, 

'The  non-contributory  system  of  New  Jersey  ceased  to  operate  in 
April,  1919. 

136 


THE  GOVERNMENT'S  CONTRIBUTION 

or  by  other  restrictions.  Where  the  pensioning  authorities 
hesitate  to  change  the  original  scheme  of  benefits  or  where 
legal  responsibility  for  pension  payments  prevents  such  course, 
compensatory  economies  are  effected  in  salary  expenditures 
either  by  lowering  existing  wages  or  checking  normal  salary 
increases,  under  the  plea  of  the  costliness  of  pension  pro- 
visions. 

Cash  Disbursement  to  Cover  Annual  Deficiencies  of  an 
Unsound  Fund.  Closely  related  to  the  "cash  disbursement" 
method  proper,  which  is  applied  where  no  special  fund  exists, 
is  the  method  employed  where  a  fund  does  exist  to  supplement 
deficiencies  in  its  income  by  a  cash  disbursement.  In  several 
of  the  unscientific  systems  the  framers,  realizing  that  the 
revenues  with  which  the  system  is  provided  under  the  statute 
may  prove  insufficient  to  support  the  promised  benefits,  have 
incorporated  in  the  law  a  provision  that  in  case  in  any  one 
year  a  deficiency  arises  the  state  or  the  city  shall  appropriate 
an  amount  sufficient  to  cover  it.  The  idea  usually  is  that  the 
deficiencies  will  be  only  accidental  and  temporary.  The  actual 
experience,  however,  is  that  once  a  deficiency  appears,  it  stays, 
and  furthermore  increases  from  year  to  year  under  the  pres- 
sure of  increasing  disbursements.  As  a  result,  larger  and 
larger  appropriations  are  required  each  year  to  cover  the 
rapidly  increasing  disbursements  and  the  system  becomes 
exceedingly  burdensome. 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: Using  Special  Revenues  not  Determined  by 
Pension  Needs.  In  reviewing  the  evolution  of  teachers'  pen- 
sion systems  in  this  country  it  was  seen  how  the  early  wholly 
contributory  systems,  in  their  attempts  to  secure  government 
aid,  shrewdly  suggested  the  diversion  to  their  funds  of  obscure 
special  revenues — such  as  excise  taxes  or  the  interest  on  the 
school  funds — thus  avoiding  the  opposition  which  would  have 
been  aroused  had  a  direct  appropriation  from  the  general 
revenues  been  sought.  The  device  thus  resorted  to  as  a  meas- 

137 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ure  of  strategy  was  not  long  in  hardening  into  a  precedent; 
and  in  several  of  the  existing  systems  the  government's  con- 
tribution still  consists  of  special  revenues  which  cannot,  in 
the  nature  of  things,  bear  any  accurate  relation  to  the  needs 
of  the  system.  So,  in  California,  5  per  cent  of  the  inheri- 
tance tax  is  thus  allotted;  in  New  York,  previous  to  the  re- 
organization of  its  system,  an  equal  percentage  of  its  excise 
tax  was  thus  pledged.  Of  a  similar  character  was  the  pro- 
vision under  the  old  system  of  New  York  City  and  of  Cleve- 
land that  made  available  the  sums  obtained  by  deductions  from 
teachers'  salaries  on  account  of  unexcused  absences. 

The  objection  to  these  methods  of  financing  the  govern- 
ment's contribution,  on  the  score  solely  of  their  unreliability 
and  their  lack  of  correspondence  to  the  needs  of  the  system, 
is  too  obvious  to  require  discussion.  The  fluctuating  character 
of  incomes  derived  from  such  sources  is  illustrated  by  the 
experience  of  the  old  New  York  City  fund  with  its  excise  tax 
contribution,  which  slowly  decreased  during  the  first  four 
years,  when  it  suddenly  took  an  upward  trend  which  it  fol- 
lowed during  the  next  seven  years  until,  after  a  steep  increase 
in  1908  and  an  almost  as  steep  a  decrease  in  1909,  it  took  a 
downward  trend  which  it  followed  to  1917,  when,  under  the 
new  law,  it  was  altogether  eliminated  from  the  fund.  Re- 
ferring to  the  California  method  of  financing  the  state's  con- 
tribution by  setting  aside  a  percentage  of  the  inheritance  taxes 
received,  the  retirement  fund  committee  said  in  1916: 

The  inheritance  tax  is  a  fluctuating  amount,  depending  upon 
the  number  of  estates  liable  to  the  tax  probated  during  any  one 
fiscal  year.  It  has  been  an  unusually  prolific  source  of  revenue 
during  the  past  two  fiscal  years,  but  may  suffer  a  decline  at 
any  time.  It  is  as  uncertain  as  life.  The  last  congress  placed 
a  federal  tax  on  inheritances,  which  may  seriously  affect  state 
income  from  this  source.  The  combination  of  state  and 
federal  tax  may  place  such  an  onerous  burden  upon  inheri- 
tances that  public  opinion  will  demand  a  reduction,  in  which 
case  the  state  will  be  obliged  to  make  the  sacrifices,  as  it  alone 
is  responsive  to  the  wishes  of  the  people  of  California. 

138 


THE  GOVERNMENT'S  CONTRIBUTION 

Should  this  situation  arise,  the  percentage  now  received  by  the 
retirement  salary  fund  from  the  inheritance  tax  must  be 
increased,  or  a  regular  income  provided  from  another  source. 
The  retirement  salary  fund  cannot  suffer  the  slightest  reduc- 
tion in  revenues,  but  should,  on  the  contrary,  be  considerably 
augmented  if  we  desire  to  place  the  future  administration 
of  the  law  upon  a  secure  financial  foundation.1 

The  history  of  pension  funds  supported  by  special  revenue 
indicates  that  their  financial  unsoundness  is  slow  to  be  borne 
in  on  the  public  mind.  The  special  revenue  grows  at  a  slower 
rate  than  the  requirements  of  a  pension  fund  and  with  each 
year  the  appropriation  becomes,  therefore,  less  and  less  ade- 
quate. But  since  the  money  becomes  available  automatically, 
the  bad  condition  of  the  pension  fund  may  continue  until  the 
fund  collapses.  Only  then  will  the  government  be  called  upon 
to  revise  its  pension  provisions. 

Such  was  the  experience  of  the  New  York  City  pension 
funds,  as  shown  by  the  following  extracts  from  the  reports  of 
the  pension  commission  :* 

The  constant  extension  and  liberalization  of  the  city's  pen- 
sion policy  in  the  past  is  directly  due  to  the  comparative  ease 
with  which  its  pension  funds  secured  cash  through  indirect 
methods,  apparently  imposing  no  burden  either  on  the  tax- 
payer or  on  the  beneficiary.  It  is  obvious  that  the  city  would 
have  revised  its  pension  provisions  long  ago  if  the  amounts 
it  indirectly  contributed  had  appeared  in  the  annual  budgets 
as  direct  appropriations  clearly  labeled  'for  pensions.' 

In  connection  with  the  criticisms  of  the  present  method  of 
providing  funds  to  meet  the  cost  of  pensions,  it  is  desired  to 
call  special  attention  to  its  worst  feature — the  use  of  miscel- 
laneous city  revenues  as  sources  of  income.  In  the  first  place, 
it  is  unfair  to  the  taxpayer,  since  it  throws  a  cloak  of  mystery 
over  the  real  cost  of  pensions.  The  money  becoming  avail- 
able each  year  from  these  indirect  sources  automatically  re- 
verts to  the  fund  and  is  used  up  without  the  public  realizing 

School  Report,  1916,  p.  74. 

'Report  on  the  Pension  Funds  of  the  City  of  New  York,  1916,  Part 
I,  p.  54.  Report  on  the  Teachers'  Retirement  Fund,  1915,  p.  28. 

139 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  true  proportions  of  the  expenditure.  Secondly,  there  is 
no  parallel  between  the  growth  of  miscellaneous  revenues 
applicable  to  the  fund  and  pension  payments,  since  increases 
in  revenues  seldom,  if  ever,  grow  at  the  rate  of  pension  lia- 
bilities. 

It  is,  therefore,  in  the  interest  of  both  the  taxpayer  and  the 
present  and  prospective  beneficiaries  of  the  fund  that  it  should 
not  derive  its  income  from  miscellaneous  revenues,  a  method 
which  creates  the  erroneous  impression  of  shifting  the  pension 
burden  from  both  the  taxpayers  and  the  beneficiaries.  The 
city's  part  of  the  pension  fund  cost  should  be  met  systemati- 
cally and  openly  by  budgetary  appropriations. 

The  only  sound  method  of  raising  the  government  con- 
tribution is  to  raise  it  from  the  general  fund.  Such  an  appro- 
priation must  appear  in  the  annual  budget.  It  is  not  disguised, 
therefore,  as  is  the  one  which  is  derived  from  special  funds, 
and  it  can  be  coordinated  with  the  financial  plan  of  the  gov- 
ernment in  relation  to  its  other  expenditures. 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: Fixing  Rates  not  Related  to  Pension  Needs. 
Very  similar  in  some  of  its  effects  to  the  use  of  special 
revenues  for  financing  the  government's  contribution  is  the 
provision,  found  in  a  number  of  systems,  whereby  the  govern- 
ment's annual  contribution  to  the  pension  fund,  though  drawn 
from  the  general  revenues,  is  determined  as  to  amount  by 
provisions  having  no  accurate  relation  to  the  needs  of  the 
system.  Thus,  the  government's  contribution  is  sometimes 
fixed  at  a  certain  percentage  of  the  assessed  valuation  of  all 
taxable  property.  Four  of  the  nineteen  contributory  systems 
selected  for  special  study  make  this  provision.1 

In  Cleveland  the  city's  contribution  is  fixed  at  from  i  to  2 
per  cent  of  the  total  school  taxes.  The  advantage  of  govern- 
ment aid  thus  determined  is  that  it  tends  steadily  to  increase 
in  amount.  Unfortunately,  however,  it  increases  slowly,  for 

'The  rates  are  as  follows :  Illinois,  o.i  mill ;  Minnesota,  0.5  mill ;  Bos- 
ton Permanent  Fund,  0.7  mill;  Denver  (maximum),  o.i  mill. 

140 


THE  GOVERNMENT'S  CONTRIBUTION 

it  depends  upon  the  comparative  increase  of  the  population 
and  taxable  property,  whereas  the  requirements  of  the  fund 
always  increase  more  rapidly,  as  they  depend  upon  the  rapidly 
increasing  number  of  pensioners  on  the  retired  list  and  the 
number  and  payroll  of  the  members.  In  the  Boston  Per- 
manent Fund  the  contribution  from  the  mill  tax  increased 
from  $64,000  to  $72,000  during  the  first  five  years,  whereas 
the  payroll  of  the  members  of  the  fund  increased  from 
$2,700,000  to  $3,500,000.  The  ratio  between  the  contribu- 
tions and  the  payroll  which  was  2.3  per  cent  in  1908  was 
only  2  per  cent  in  1913.  The  contribution  in  1915  was 
exceeded  by  the  disbursements  and  had  to  be  increased  by  a 
new  law  from  five  cents  to  seven  cents  on  each  thousand  dol- 
lars of  assessed  valuation. 

In  a  few  jurisdictions  the  rate  of  the  government's  contri- 
bution is  determined  by  factors  more  nearly  related  to  the 
probable  growth  of  pension  requirements.  In  Wisconsin  the 
state's  contribution  is  fixed  at  the  rate  of  ten  cents  per  each 
person  of  school  age.  A  government  contribution  of  a  cer- 
tain percentage  of  the  payroll  obtains  in  the  systems  of  the 
state  of  New  York  and  the  city  of  Chicago.  It  increases  at 
the  same  rate  as  the  membership  and  the  payroll  increases,  and 
it  can  easily  be  fixed  at  the  same  percentage  at  which  the 
employee's  contribution  is  fixed. 

As  the  pension  requirements  increase  more  rapidly  than  the 
payroll  or  the  school  population,  these  methods  of  determin- 
ing the  government's  contribution,  while  much  more  satis- 
factory than  those  dependent  upon  conditions  not  directly 
related  to  the  schools,  are  open  to  the  general  objection  that 
they  do  not  insure  to  the  pension  fund  an  amount  correspond- 
ing to  its  scientifically  determined  needs. 

Most  unscientific  of  all  is  the  provision  found  in  some 
systems  for  the  contribution  by  the  government  of  a  uniform 
amount  each  year. 

Out  of  the  twenty-four  systems  which  have  been  studied 

141 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

in  detail,  only  two  systems — those  of  Maine  and  Virginia — 
have  this  provision.  The  state  contribution  in  Maine  is  fixed 
by  statute  at  $25,000,  and  that  in  Virginia  at  $5,000  annually. 
In  view  of  the  fact  that  the  pension  expenditure  is  of  a  con- 
stantly increasing  nature,  it  is  evident  that  it  cannot  be 
financed  long  with  a  contribution  of  a  fixed  amount.  In  time 
the  expenditures  of  the  fund  will  outgrow  its  fixed  revenue. 

Unsound  Methods  of  Financing  the  Government's  Con- 
tribution: Amount  of  Contribution  Discretionary.  In  a 

few  systems  the  amount  to  be  contributed  by  the  government 
is  not  fixed  according  to  any  definite  rule,  the  appropriate 
fiscal  authorities  being  empowered  to  fix  whatever  amount 
they  deem  proper.  The  systems  of  Baltimore,  Pittsburgh, 
Buffalo  and  Philadelphia  illustrate  this  type  of  government. 
A  system  which  has  to  depend  for  its  support  upon  the  change- 
able views  of  the  government  administrators,  and  which  may 
be  curtailed  at  any  moment,  cannot  develop  normally.  The 
example  of  Pittsburgh  is  illustrative.  After  four  years  of 
operation,  during  which  the  requirements  of  the  fund  in- 
creased from  $7,000  to  about  $50,000,  the  board  of  education, 
impressed  by  the  increased  contribution  it  was  required  to 
provide,  decided  to  discontinue  granting  new  retirements, 
gradually  to  abandon  the  old  system,  and  to  establish  a  new 
system  instead.  In  Philadelphia  the  city  may,  under  the 
statute,  contribute  any  amount  not  below  $50,000  nor  above 
the  amount  of  the  teachers'  contributions  of  the  preceding 
year.  During  the  first  six  years  it  contributed  only  $50,000 
annually.  Each  following  year  since  1913  it  arbitrarily  in- 
creased its  contribution  by  $10,000.  In  Buffalo  the  statute 
provided  that  the  common  council  might  in  its  discretion 
contribute  any  amount  not  more  than  the  amount  which  the 
teachers  contributed  the  year  before.  The  council  decided 
upon  an  appropriation  of  only  $10,000.  It  is  still  contribut- 
ing this  small  amount,  less  than  one-fourth  of  the  amount 
which  the  teachers  contribute,  at  the  present  time. 

142 


CHAPTER  IX 
THE  TEACHER'S  CONTRIBUTION 

The  determination  of  the  contributions  to  be  paid  by  the 
teachers  presents  two  distinct  problems:  How  shall  the  cost 
of  the  benefits  be  assessed  against  the  different  classes  of 
teachers?  How  shall  the  amount  assessed  against  the  indi- 
vidual teacher  be  distributed  over  the  entire  period  of  con- 
tribution ? 

The  desirability  of  making  some  distinction  in  the  assess- 
ment of  contributions  between  the  various  classes  of  teachers 
follows  plainly  from  the  varying  relations  which  they  sustain 
to  the  probable  benefits  of  the  system.  Most  clearly  is  this 
apparent  in  connection  with  retirement  benefits.  In  those 
systems,  forming  a  considerable  proportion  of  the  whole, 
which  make  a  minimum  length  of  service  the  only  requisite 
for  retirement,  the  age  at  which  a  teacher  enters  the  service 
will  obviously  bear  an  essential  relation  to  his  or  her  pros- 
pective retirement  benefit;  a  teacher  entering  the  service  at 
the  age  of  20,  for  example,  in  a  system  where  30  years'  service 
is  required  for  retirement,  may  reasonably  look  forward  to 
from  fifteen  to  twenty  years  of  life  after  retirement;  while  one 
entering  at  the  age  of  30  may  expect  to  live  after  retirement  no 
more  than  about  two-thirds  of  that  period.  Again,  in  those 
relatively  few  systems  which  permit  retirement,  regardless  of 
length  of  service,  at  a  fixed  age,  it  is  plain  that  the  later  in  life 
the  teacher  enters  the  service  the  shorter  the  period  he  or  she 
has  in  which  to  contribute  towards  the  retirement  benefit. 

Sex,  too,  has  an  important  bearing  on  the  probability  of 
benefits.  The  mortality  of  women  is  lower  than  that  of  the 

143 


TEACHERS*    PENSION  .  SYSTEMS    IN    THE    UNITED    STATES 

men.  The  cost  of  a  given  annuity  payable  at  a  given  age  is, 
therefore,  higher  in  the  case  of  the  women  than  in  the  case 
of  the  men,  and  it  would  be  unfair  to  charge  them  for  it  at 
the  same  rate.  Where  retirement  is  contingent  upon  length 
of  service  and  women  may  retire  at  an  earlier  age  than  men, 
the  need  for  different  rates  is  still  more  manifest. 

Lastly,  in  those  systems  in  which  the  amount  of  the  annual 
retirement  benefit  is  dependent  upon  the  salary  earned  by  the 
teacher  at  the  time  of  retirement  or  for  a  period  previous  there- 
to, the  amount  of  the  benefit  received  by  the  individual,  other 
things  being  equal,  will  vary  according  as  the  rapidity  of  the 
advancement  of  the  individual  in  the  service  has  been  above 
or  below  the  average. 

In  any  scientific  pension  system  the  three  factors  mentioned 
— age  (both  at  entrance  and  retirement),  sex  and  salary — 
should  be  given  weight  in  determining  the  rates  of  contribu- 
tion. It  is  impossible  of  course  to  foretell  which  of  the  mem- 
bers of  a  fund  will  be  superannuated  or  disabled,  which  will 
resign  or  be  dismissed  or  die  before  qualifying  for  the  benefit, 
or  to  tell  how  long  this  or  that  member  will  live  after  retire- 
ment, and  how  much  in  aggregate  annuities  he  will  draw  from 
the  fund,  and  to  make  him  contribute  accordingly.  But  it  is 
possible  to  determine  through  statistical  observations  and 
actuarial  computations  how  many  members  will  receive  one 
or  the  other  kind  of  benefit,  how  long  on  the  average  those 
who  retire  at  a  certain  age  will  live  after  retirement,  and  how 
much  on  the  average  they  will  draw  from  the  fund  during 
that  time,  and  what  will  be  the  average  cost  of  various  benefits 
at  various  ages  for  different  sexes  and  salary  groups. 

In  some  of  the  unscientific  systems  the  rates  of  contribu- 
tion have  been  fixed  in  an  arbitrary  manner  and  the  factors 
mentioned  have  been  either  entirely  ignored,  or  only  one  of 
them — the  salary  factor — has  been  considered.  In  a  number 
of  these  systems  the  length  of  service  factor  has  been  taken 

144 


THE  TEACHER'S  CONTRIBUTION 

into  account  and  an  arbitrary  difference  in  the  rates  based 
on  the  length  of  service  has  been  adopted. 

Contribution  not  on  a  Cost  Basis :  Uniform  for  all  Mem- 
bers, Irrespective  of  Age,  Salary,  Sex  and  Service.  A 

number  of  systems  are  still  found  in  which  a  uniform  con- 
tribution is  required  of  all  members,  regardless  of  the  differ- 
ence in  age,  salary,  sex  and  length  of  service  of  the  members. 
Among  the  twenty-four  systems,  here  discussed  three  are  of 
this  type.  The  facts  regarding  them  are  as  follows : 

SYSTEMS  HAVING  AMOUNT  OF  CONTRIBUTION  UNIFORM  THROUGHOUT 


Systems 

Contributions 

Benefits 

CONDITIONS  OF 
RETIREMENT 

Age, 

Length  of 
Service 
(Years) 

California  

$1  monthly 
$18  yearly 
$20  yearly 

$500 
$120 

$12.50      for 
each    year 
of   service, 
maximum, 
$450 

None 
« 

u 

30 
30 
30 

Boston  Permanent 
Fund 
Cleveland  

Such  systems  are  fortunately  few.  Most  systems  recognize 
one  or  more  of  the  variables  discussed  in  fixing  the  rates  of 
contribution. 

Contribution  not  on  a  Cost  Basis:  Graduated  According 
to  Salary.  The  graduation  of  contributions  according  to 
salary  is  the  form  of  graduation  most  commonly  found  in  the 
teachers'  pension  systems  of  to-day. 

The  table  on  the  following  page  shows  the  systems  falling  in 
this  group. 

It  will  be  noticed  that  the  New  Jersey  system  graduates 
the  contributions  according  to  salary  and  length  of  service 
rendered  previous  to  becoming  a  member.  By  this  method  it 

145 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

SYSTEMS  HAVING  RATE  OF  CONTRIBUTIONS  GRADUATED  ACCORDING  TO  SALARY 


Systems 

Contributions 

Benefits 

CONDITIONS  OF 
RETIREMENT 

Age 

Length  of 
Service 
(Years) 

New  Jersey  

2  per  cent  of  sal- 
ary for  members 
with    10   years' 
prior  ser  vice  ;2% 
per  cent  with  15 
years,  and  3  per 
cent    if    longer 
prior  service 
1  per  cent  of  salary 

1  per  cent  of  salary 

60  per  cent 
of  salary, 
minimum 
$250;  max- 
imum $650 

Yt     salary, 
maximum, 
$600 
Yt     salary, 
maximum, 
$500 

None 

60      a 
c 

None  a 
58  (men) 
50  (women) 

20     (disa- 
bility) 

tnd    25 
r 
nd    35 
30 

New  York  

Virginia  

presents  an  attempt  in  an  indirect  way  and  in  a  crude  form 
to  graduate  contributions  according  to  entrance  age.1 

Contribution  not  on  a  Cost  Basis:  Graduated  According 
to  Length  of  Service.  In  a  few  systems  the  contribution  has 
been  made  to  depend  entirely  upon  the  length  of  service,  the 
period  of  service  being  divided  into  five  or  ten  year  periods 
and  a  fixed  amount  of  contribution  set  for  each  period,  regard- 
less of  the  salary  or  age  of  the  member.  The  table  on  the 
following  page  sets  forth  certain  facts  regarding  the  systems 
in  this  class. 

The  crudity  of  this  method  of  graduating  contributions, 
and  its  failure  to  correspond  in  any  way  to  the  variations  of 
age,  and  in  ,any  but  the  roughest  way  to  variations  of 
salary,  are  obvious.  Its  sole  merit,  surely  a  slight  one,  is  that 
of  simplicity. 

Contribution  not  on  a  Cost  Basis:  Graduated  According 
to  Salary  and  Length  of  Service.  In  a  few  systems  the 

This  system  as  already  stated  is  no  longer  in  operation. 

146  \ 


THE  TEACHER'S  CONTRIBUTION 


O 

CO 

1 

H 

§ 

I 
2 


o 

g 

< 
K 


"o  a, 

°| 

c  -D 

8 

8 

c<5 

ii 

4>C/3 

T3 
j5 

H  a: 

5  H 

<u 

<u 

5s 

1 

S 

§ 

I 

Retirement 

M 
C 
S 

$16  for  each 
year  of  ser- 
vice, max- 
imum $400 

•g   ^ 

8gg1 

co  oee-  a; 

of  service 
after  20 
years,max- 
imum  $500 

8 

S 

in 

1 

o  ra 

X  <u 

1 

i 

I 

D 

H 

Q 

w> 

i 

u 

w  M 

O  rt 

8 

in 

o 

^ 

m 

€/3* 

• 

in  r1^ 

£ 

9 

j 

5 

1—  t  03 

0 

b 

si 

o 
i—  i 

1 

in 

i—  i 

9 

Q 

z 

°'£ 

£ 

0 

t—  1 

0 

o 

H 

ffl 

S 

H 

m  o) 

O 

U 

eS 
£>* 

in 

in 

g 

§ 

1 

(A 

CO 

1 
D 

i 

'o 

s 

•  —j 

"-« 

12 

p 

2 

u 

147 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

contribution  is  fixed  as  a  percentage  of  salary  which  increases 
with  length  of  service,  as  shown  in  the  table  on  the  following 
page. 

It  will  be  observed  that  in  four  of  these  five  systems  the 
increase  of  contribution  with  increasing  salary  is  mitigated, 
at  least  for  the  teachers  who  advance  most  rapidly,  by  the 
provisions  setting  a  maximum  to  the  contribution  required  in 
each  period  of  service.  As  respects  these  teachers  the  systems 
in  question  bear  a  resemblance  to  those  in  which  a  fixed 
amount  of  contribution  is  required  during  each  period  of 
service.  The  low  rate  of  contribution  during  the  beginning 
of  a  teacher's  career  facilitates  the  difficult  task  of  the  leaders 
of  a  fund  of  soliciting  the  membership  of  the  younger  teachers. 
As  the  teacher  approaches  the  time  of  retirement  he  becomes 
more  willing  to  pay  the  higher  rate.  This  apparently  is  one 
of  the  reasons  why  this  arrangement  has  been  adopted. 

Contribution  of  a  Uniform  Percentage  of  Salary  for  all 
Members,  with  Benefits  Adjusted  on  a  Cost  Basis.  A  plan 
which  does  not  take  account  of  the  age  of  the  entrant  in  fixing 
the  rate  of  contribution,  but  which  instead  takes  it  into  account 
in  fixing  the  benefit,  is  found  in  the  systems  of  Massachusetts 
and  Connecticut.  Every  member  contributes  annually  5  per 
cent  of  his  salary  regardless  of  the  age  at  which  he  entered 
the  service,  but  the  longer  the  period  during  which  the  con- 
tribution is  made,  the  greater  is  the  sum  which  accumulates 
with  interest  and  the  greater  the  benefit  which  it  can  purchase. 

The  weakness  of  this  plan  appears  in  case  of  the  late  entrant. 
His  contribution  provides  an  inadequate  annuity  for  super- 
annuation and  disability  and  also  inadequate  savings  benefits 
in  case  of  resignation,  dismissal  or  death.  For  example,  a 
man  who  enters  the  service  at  age  25  and  contributes  for 
thirty-five  years  5  per  cent  from  a  salary  which  amounts  to 
$700  the  first  five  years,  $1,000  the  next  twenty  years  and 

148 


THE  TEACHER'S  CONTRIBUTION 


ll 

°g 

cQ 

8 

« 

o 

•<* 

B 

o  S 

J 

T3 

M  — 

e 

.     l-t 

H  05 

t5 

0 

S  P 

z  w 

3s 

& 

< 

^o 

§ 
2 

S 

v 

8 
z, 

3 

Retirement 

Benefit 

1 

{111 

^  salary, 
minimum 
$400;max- 
imum$1000 

Yi  salary, 
minimum 
$360;  max- 
imum $600 

Yv  salary, 
minimum 
$300;  max- 

imum  $600 

o 

•M 

S 

C      U2       *-»  e 

i  N_g§ 

•>->  p 
§  3 

*->  c 
c  c 
S  30 

<u 

o  « 

0 

£°2^>0  £°j 

0  Is 

"  §S 

u 

i^ 

a 

B^ao  a'36^ 

a  A 

oJ'xoa 

a  ra  6^- 

a 

CM 

£    3    w£ 

w£ 

w£ 

<M 

-g 

c              -g  g 

c  £ 

C  c 

0}  C 

C 

c 

o 

<U 

^3                     4^  3 

<l^   S 

o  30 

0 

1 
S 

38 
12  ** 

LI 

a 

CO            "  CO 
5  oo          i^.Soj 

rt            a  & 

^  go 

^  goo 

u 

a 

Q 

£          M£ 

c^£ 

rH 

S 

B 
J 

Se 

"S 
8 

1             Si 

c  § 

<u  3 

gig 

§ 

§ 

5  S 

a 

d            am 

a'P 

a'S?a 

Ut 

a 

M 

o 

S           ^£ 

w£ 

r—  t 

S 

S 

-i_> 

C                           •!->    C 

^ 

4_)    r^ 

G                        C    C 

c 

^          O 

c 

u 
• 

M 

0  to 

f—  i  ^ 

1 

|LO          8  go 

8 

8  |° 

8 

K 

»* 

a 

•—  i 

a  ra 

! 

D'X^H 

a 

«s 

8 

I-  !L 

u 

|lo 

8 

!* 

& 

g^-        a'^ 

a 

fc'x—  ( 

CX  Cy  ^y9- 

a 

-« 

£         ^£ 

T—  1 

-H     £ 

^H 

i 

of? 

.2 

03 

.S 

r 

a 

P 

S 

c 

a 

i 

| 

6 

w 

i 

.2 

JQ 

•s 

*^ 

*H 

IS 

13 

4> 

^ 

S 

CU 

CQ 

2 

149 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

$1,500  the  last  ten  years,  will  have  to  his  credit  $2,4i61 
which  will  purchase  an  annuity  of  about  $225  at  the  age  of 
60.  On  the  other  hand,  a  man  who  enters  the  service  at  age 
50  and  contributes  5  per  cent  from  a  $1,000  salary  for  ten 
years  will  have  to  his  credit  only  $579.64,  which  will  purchase 
an  annuity  of  only  about  $55-2 

Rate  of  Contribution  Graduated  According  to  Age  and 
Salary:  Benefits  on  a  Cost  Basis.  The  new  systems  of  New 
York  City  and  Pennsylvania  graduate  the  contributions 
according  to  age  at  entrance  into  the  service  and  according  to 
salary.  In  the  case  of  an  early  entrant  a  small  contribution 
paid  during  a  long  period  accumulates  an  amount  sufficient  to 
purchase  at  a  certain  age  an  "annuity"  which,  together  with 
the  "pension"  offered  by  the  city,  will  provide  a  total  of  about 
one-half  pay.  In  the  case  of  later  entrants  a  large  contribu- 
tion, although  made  through  a  shorter  period,  makes  it  pos- 
sible to  purchase  an  annuity  of  about  the  same  amount,  and 
also  to  provide  an  adequate  savings  benefit  in  case  of  resigna- 
tion, dismissal  or  death.  This  method  is,  therefore,  much 
more  elastic  than  that  of  the  Massachusetts  system. 

If  the  benefits  were  rigidly  fixed  at  one-half  salary,  then 
in  computing  the  percentage  of  salary  required  to  cover  the 
cost  of  that  benefit,  it  would  have  been  necessary  to  assume 
a  certain  average  rate  of  salary  advancement.  A  member 
who  advances  more  rapidly  than  the  average,  however,  may 
eventually  receive  more  than  he  has  been  paying  for;  whereas 
a  member  who  advances  more  slowly  may  receive  less  than 
what  he  has  been  paying  for.  The  result  will,  to  a  certain 
extent,  be  inequitable. 

The  framers  of  the  New  York  City  and  Pennsylvania  sys- 

t  5  contributions  at  $35 $187.91 

20  5° 1,358.63 

10  "  "     75 869.46 


Total  35 $2,416.00 

"Table  4  of  Appendix  4  shows  the  annuities  which  can  be  purchased  by 
certain  sums  at  various  ages. 


THE  TEACHER'S  CONTRIBUTION 

terns  have  sought  to  obviate  this  difficulty  by  the  following 
method.  They  determine  the  percentages  of  salary  which,  if 
contributed  on  the  basis  of  average  salary  advancement,  will 
purchase  at  a  certain  age  or  after  a  certain  length  of  service 
an  "annuity"  of  a  certain  fraction  of  salary,  it  being  assumed 
that  the  other  fraction  is  contributed  by  the  government;  but 
they  do  not  guarantee  that  in  every  case  the  annuity  will  amount 
exactly  to  that  fraction  of  salary.  Each  member  receives  such 
an  annuity  as  his  contributions  will  purchase.  In  case  of 
those  who  advance  more  rapidly  than  the  average,  the  amount 
will  be  somewhat  less  than  that  fraction  of  salary,  whereas  in 
the  case  of  those  who  advance  more  slowly  the  annuity  will 
amount  to  more  than  that  fraction.  Thus,  the  members  who 
advance  more  slowly  do  not  pay  for  the  annuities  of  those 
who  advance  more  rapidly. 

Distributing  the  Contribution  over  the  Period  of  Serv- 
ice. In  some  actuarial  systems  it  has  been  proposed  that  the 
rate  of  contribution  be  made  lower  at  the  beginning  of  the 
service  than  at  a  later  period,  and  that  it  be  made  to  gradually 
increase  as  the  service  advances.  The  main  advantage  claimed 
for  this  method  is  that  it  lightens  the  burdens  of  the  members 
at  the  time  when  they  are  young  and  least  interested  in  retire- 
ment provisions,  and  increases  the  burden  as  they  become 
older  and  more  concerned  in  retirement. 

The  outstanding  objection  to  this  method  is  that  it  impedes 
the  operation  of  the  interest  factor,  for  it  reduces  to  the  lowest 
rate  the  first  contributions  which  earn  most  interest  during 
the  long  period  they  remain  on  deposit,  and  increases  to  the 
highest  rate  the  last  contributions  which  earn  the  least  inter- 
est. In  view  of  the  loss  in  interest  this  form  of  contribution 
is  in  the  aggregate  much  more  burdensome  to  the  employee 
than  is  a  contribution  of  a  uniform  percentage  of  salary 
throughout  the  entire  service.  None  of  the  systems  which 
have  been  established  on  an  actuarial  basis  either  in  this 
country  or  abroad  have  adopted  this  method.  All  have  adop- 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ted  the  uniform  percentage  throughout  the  entire  service  as 
the  most  economic  form  of  contribution. 

Minimum  Contribution  as  a  Prerequisite  to  Full  Benefit. 

To  protect  their  fund  against  being  drained  by  the  payment 
of  pensions  in  respect  to  prior  services  during  which  no  con- 
tributions were  made,  some  of  the  unscientific  systems  require 
that  a  teacher  who  applies  for  retirement  must  have  con- 
tributed an  amount  equal  to  at  least  one-half  of  one  year's,  or 
in  some  systems  a  year's,  pension,  otherwise  his  pension  will 
be  proportionately  reduced.  The  table  on  the  following  page 
gives  the  requirements  in  this  respect  of  the  systems  surveyed 
in  this  volume. 

In  view  of  what  has  been  said  in  previous  chapters  of  the 
large  size  which  "accrued  liabilities"  invariably  assume  in  a 
system,  it  must  be  apparent  that  provisions  of  this  type  are  of 
themselves  so  utterly  inadequate  to  protect  the  fund  and  the 
contributions  of  the  new  entrants  and  of  the  younger  "present 
teachers"  as  to  be  virtually  useless. 


152 


THE  TEACHER'S  CONTRIBUTION 


TOTAL  AMOUNT  OF  CONTRIBUTIONS  WHICH  A  TEACHER  MUST  PAY  TO  THB 
FUND  BEFORE  RECEIVING  FULL  RETIREMENT  BENEFIT 


Retirement 
Systems 

Is  Credit 
Allowed  for 
Service 
Rendered 
after  the 
Establish- 
ment of 
the  System? 

Total 
Minimum 
Contribution 
Required 

Amount  of 
Pension 

Minimum 
Length 
of 
Service 

Minimum 
Retire- 
ment 
Age 

1.  Systems  in  which 
total  contributions 
must  equal  at  least 
half  of  one  year's 
pension: 
New  York  

Yes 

%  of  one 

Max.  $600 

25    a 

nd  60 

Minnesota  

year's 
pension 
Arrears 

$350  to 

35    a 

20 

nd   None 
None 

California  

,4 

$360 

$500 
$500 

30 

K 

Virginia  

«« 

%  salary 

K  salary 

30 

58  men 

maximum 
$400  or 
$500 

50women 

2.  Systems  in  which 
total  contributions 
must  equal  at  least 
one  year's  pension: 
Illinois  

Yes 

One  year's 

$400 

25 

50 

New  Jersey  Re- 
tirement Fund 
Wisconsin  

pension 

« 

« 

$250  to 
$650 
$312.75  to 

20 
25 

None 

a 

Michigan  

t( 

a 

$450 
$300  to 

25 

a 

Philadelphia  

•« 

a 

$500 
$400  to 
$1,000 

30 

60 

3.  Systems  in  which 
the   minimum    of 
total  contributions 
is  higher  than  one 
year's  pension: 
Chicago  

Yes 

$450 

$400 

25 

None 

Cleveland  

$600 

$375 

30 

Boston    Retire- 
ment Fund.  .  . 

«•:", 

$540 

$132 

30 

« 

law  provides  for  the  payment  of  arrears,  which  are  fixed  as  follows : 
Ten  contributions  of  1  per  cent  and  twenty  of  2  per  cent,  or  a  total  of  50 
per  cent. 


153 


CHAPTER   X 

COMPULSORY  PARTICIPATION  AND  THE  RIGHT 
TO  MANAGEMENT 

A  number  of  pension  systems  have  been  established  in  the 
United  States  in  which  participation  upon  the  part  of  the 
teachers  has  been  optional,  but  these  proved  so  weak  and 
ineffective  that  most  of  them  have  had  to  change  to  a  com- 
pulsory basis.  Not  one  of  the  twenty-four  systems  selected 
for  detailed  examination  in  this  volume  is  of  the  optional 
type. 

Usually,  when  a  voluntary  fund  is  established,  very  few 
teachers  join  it  at  the  outset.  These  are  for  the  most  part  the 
oldest  teachers  who  are  most  interested  in  retirement  benefits. 
The  younger  teachers  remain  outside  knowing  that  they  can 
join  it  whenever  they  choose,  and  postpone  joining  from  year 
to  year  until  they,  too,  have  grown  nearer  to  old  age.  The 
financing  of  a  fund  in  which  old  teachers  are  predominant  is 
much  more  difficult  of  course  than  the  financing  of  a  system 
to  which  the  entire  force  belongs.  The  managers  are  thus 
forced  to  conduct  a  continuous  campaign  to  attract  new  mem- 
bers. Frequently,  too,  the  small  number  of  new  members  is 
offset  by  the  loss  of  other  members.  Withdrawal,  when 
allowed  under  a  voluntary  system,  frequently  has  a  disorganiz- 
ing effect  upon  the  fund  and  makes  a  stable  financial  policy 
impossible. 

Leaving  financial  considerations  aside,  important  social  and 
economic  considerations  are  involved  in  the  question  of  com- 
pulsion. The  advocates  of  optional  features  strongly  object 
to  the  introduction  of  compulsion  on  the  ground  that  it 

154 


COMPULSORY  PARTICIPATION 

amounts  to  a  confiscation  of  salary  and  is  an  infringement  of 
the  rights  of  the  individual.1  The  advocates  of  compulsion, 
on  the  other  hand,  object  to  optional  membership  on  the 
ground  that  it  fails  to  insure  protection  to  the  individual 
against  the  main  contingencies  of  life,  to  relieve  the  service 
of  the  very  teachers  who  constitute  the  main  object  of  a 
retirement  system,  and  to  protect  the  society  against  the  indi- 
vidual becoming  a  public  charge. 

The  Federation  of  Teachers'  Associations  of  New  York 
City  expressed  this  view  in  the  following  words  :2 

Because  of  narrow  optimism  and  unwillingness  to  look 
ahead,  this  type  of  teacher  (the  younger  teacher)  remains  out- 
side of  the  system  and  arrives  at  the  stage  of  superannuation 
and  disability  without  adequate  resources  of  her  own  to  fall 
back  on,  but  with  strong  determination  to  resist  retirement 
unless  it  is  accompanied  with  financial  support  at  public  ex- 
pense. The  city,  representing  society,  has  a  right  to  protect 
itself  against  unjust  and  unwarranted  claims  upon  its  treasury 
arising  from  the  failure  of  individual  teachers  to  include  thrift 
among  their  virtues. 

It  has  a  right  to  expect  of  them  as  an  intelligent  and  edu- 
cated class  of  teachers,  an  appreciation  of  the  wisdom  and 
equity  of  compulsion  in  a  sound  measure  which  offers  them 
unprecedented  financial  advantages,  and  under  which  they 
can,  under  no  conceivable  circumstances,  suffer  financial  loss. 

The  principle  of  compulsion  can  be  enforced  by  two 
methods,  depending  on  whether  compulsion  is  enforced  on 
the  teachers  already  in  the  service  at  the  time  of  enactment  of 
the  law,  or  only  upon  those  appointed  thereafter. 

Compulsion  for  New  Appointees;  Option  for  Teachers 
Already  in  the  Service.  Under  one  method  compulsion  is 
enforced  only  on  future  appointees.  On  the  day  of  their 
appointment  they  automatically  become  members  of  the  fund. 
It  is  urged  that  in  their  case  a  full  measure  of  compulsion 

"See  pp.  223  and  258. 

2Why  Compulsory  Participation  of  Teachers  in  Pension  Fund  is  Un- 
avoidable. 1916. 

155 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

may  equitably  be  enforced  because  they  are  informed  before 
they  accept  their  appointments  that  this  will  be  demanded  of 
them.  On  the  other  hand,  the  members  of  the  existing  force 
are  given  the  option  to  decide,  within  a  given  time  after  the 
enactment  of  the  law,  whether  or  not  they  desire  to  join. 
Once  they  have  made  their  decision,  however,  it  may  not  be 
changed.  If  they  enter  they  must  remain  in  the  system  so 
long  as  they  are  in  service. 

The  objections  to  this  arrangement  are  of  course  not  so 
strong  as  they  are  to  the  purely  voluntary  system,  for  it  may 
be  expected  that  ultimately  all  the  teachers  who  have  elected 
not  to  enter  the  scheme  will  die  or  leave  the  service  and  be 
replaced  by  newly  appointed  teachers  all  of  whom  will,  under 
the  law,  necessarily  become  members  of  the  system.  This 
process,  however,  may,  for  its  completion,  take  as  many  as 
fifty  years,  and  long  before  that  period  has  elapsed  the  fund 
will  have  fallen  into  an  intolerable  condition.  There  is,  in 
fact,  hardly  a  system  of  this  sort  in  operation  which  has  not 
found  it  necessary  to  obtain  legislation  offering  new  oppor- 
tunities and  new  inducements  to  enter  to  those  who  have 
not  availed  themselves  of  the  option  offered  them  by  the 
original  law.  But  in  spite  of  these  inducements  satisfactory 
responses  have  not  been  obtained. 

In  Wisconsin  out  of  9,168  teachers  only  2,168,  or  less  than 
one-fourth,  made  application  to  come  under  the  law  before 
September  i,  1912.  In  Illinois  only  about  1,500  of  the  total 
number  of  22,500  teachers  in  the  state  elected  to  join  the 
system.  In  Massachusetts  the  slow  returns  necessitated  an 
extension  of  the  time  limit.  The  experience  of  Chicago  was 
similar.1 

Compulsion  for  Present  Teachers.  The  application  of 
compulsion  to  teachers  already  in  the  service  at  the  time  of 
enactment  of  the  law,  as  well  as  to  those  appointed  there- 

*A  novel  arrangement  by  which  all  present  teachers,  who  do  not  apply 
for  exemption,  are  made  members  of  the  system,  was  adopted  in  Ohio 
and  is  discussed  in  Chapter  XVIII. 

156 


COMPULSORY  PARTICIPATION 

after,  was  originally  adopted  in  several  systems.  It  soon  met 
with  considerable  opposition  on  the  part  of  the  younger 
teachers  in  Chicago  for  the  reasons  already  described.  The 
New  York  City  system  succeeded,  however,  in  maintaining 
it  in  its  old  system,  and,  furthermore,  in  incorporating  it  in 
its  new  scientific  system  which  was  recently  enacted.  This 
method  greatly  simplifies  the  matter  of  financing  the  fund  and 
makes  the  system  more  effective  as  an  administrative,  economic 
and  social  measure.  There  is  no  doubt  but  that  with  the 
growing  appreciation  of  the  benefits  derived  from  a  combined 
pension,  savings  and  insurance  system  and  with  the  spread 
of  the  social  insurance  movement  the  teachers  will  look  more 
favorably  upon  the  compulsory  feature  and  will  readily 
accept  it. 

More  recently  the  view  has  taken  hold  that  while  the  pay- 
ment of  certain  minimum  rates  of  contributions  and  the  dis- 
charge of  certain  minimum  obligations  should  be  compulsory, 
contributions  above  the  minimum  rates  and  the  discharge  of 
higher  obligations  should  be  left  optional  with  the  member. 
This  combination  of  compulsory  and  optional  features  is 
highly  desirable  for  it  gives  recognition  to  the  mutual  rights 
and  responsibilities  of  the  employees  and  the  government. 
It  has  been  adopted  in  the  new  systems  of  both  New  York 
City  and  Pennsylvania. 

The  Selection  of  the  Managers  of  the  System.  The 
management  of  a  pension  fund  may  be  vested  either  in  an 
already  existing  authority  or  in  a  body  specially  appointed  for 
that  purpose.  The  first  method  is  adopted  in  a  number  of 
systems.  Thus,  in  California  and  Pittsburgh  the  management 
is  vested  in  the  board  of  education;  in  Denver  in  the  board 
of  school  directors;  in  Virginia  in  the  department  of  public 
instruction;  in  Maine  in  the  superintendent  of  schools;  and 
in  New  Jersey1  in  the  state  commissioner  of  education.  The 
disadvantage  of  this  method  is  that  the  authorities  cannot  give 
the  pension  fund  the  undivided  attention  which  it  requires. 

'System  now  discontinued. 

157 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

In  most  of  the  systems  a  special  retirement  board  is  pro- 
vided upon  which  both  the  educational  authorities  and  the 
members  of  the  fund  are  represented.  In  some  systems  the 
representatives  of  the  authorities  have  the  majority  in  the 
board;  in  other  systems  the  representatives  of  the  members 
of  the  fund  have  a  dominating  voice;  and  in  a  few  systems 
both  sides  are  equally  represented. 

Several  objections  have  been  raised  against  retirement 
boards  in  which  the  government  representatives  are  in  the 
majority.  It  is  urged  that  such  a  board  is  inclined  to  act  in 
the  interests  of  the  government  rather  than  in  those  of  the 
members  of  the  fund.  The  board  frequently  fails,  therefore, 
to  secure  the  teachers'  cooperation,  and  if  the  fund  develops 
a  deficiency  the  blame  is  placed  upon  the  government.  Seven 
of  the  twenty-four  systems  studied  in  detail  have  retirement 
boards  of  this  nature. 

On  the  other  hand,  retirement  boards  in  which  the  majority 
of  trustees  are  elected  by  the  members  of  the  fund  have  been 
objected  to  on  the  ground  that  these  boards  are  inclined  to  be 
too  liberal  to  the  beneficiaries  of  the  fund  and  to  disregard 
the  interests  of  the  schools.  If  a  deficiency  appears  in  the 
fund  and  the  government  is  called  upon  to  undertake  the  heavy 
expense  of  covering  the  deficiency  and  to  save  the  fund  from 
depletion,  the  government  may  refuse  to  give  the  required 
assistance  on  the  ground  that  the  members  of  the  fund  are 
responsible  for  its  mismanagement  and  should,  therefore,  pro- 
vide for  the  deficiency.  This  type  of  a  retirement  board  is 
found  in  eight  of  the  twenty- four  systems. 

A  provision  for  a  retirement  board  in  which  the  members 
of  the  fund  and  the  authorities  are  represented  in  equal  num- 
bers avoids  the  objections  raised  to  the  foregoing  plans.  It 
assures  equal  representation  of  the  interests  of  each  party  in 
all  matters  concerning  the  operation  and  development  of  the 
fund  and  it  divides  the  responsibility  of  its  safe  management 
equally  between  them.  The  state  system  of  Massachusetts  is 

158 


COMPULSORY  PARTICIPATION 

provided  with  such  a  retirement  board.  It  consists  of  seven 
members,  three  of  whom  represent  the  state.  They  are  the 
commissioner  of  education,  the  insurance  commissioner  and 
the  bank  commissioner.  The  three  other  members  are  elected 
by  the  members  of  the  fund.  The  seventh  member  is  elected 
by  the  six  members.  The  fact  that  the  insurance  and  bank 
commissioners  are  on  the  board  and  that  the  secretary  elected 
by  the  board  is  acquainted  with  actuarial  problems  assures  to 
the  board  a  technical  knowledge  which  is  essential  to  a  sound 
financial  management  of  the  fund. 

Following  is  a  table  setting  forth  the  organization  of  the 
retirement  boards  in  those  of  the  twenty-four  systems  studied 
in  which  both  the  government  and  the  teachers  are  represented. 


159 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


ORGANIZATION  OF  RETIREMENT  BOARDS  HAVING  REPRESENTATIVES  OF  BOTH 

GOVERNMENT  AND  TEACHERS 
I — BOARDS  WITH  GOVERNMENT  REPRESENTATIVES  IN  MAJORITY 


Systems 


Total 
Number 

of 

Members 
in  the 
Retire- 
ment 
Board 


Members  Representing  the  State 
or  City 


Members 
Representing 

the 
Teachers 


Boston  Retire- 
ment Fund 


New  York  State 


Minnesota . 
Buffalo. . 


Philadelphia. . . 
New  York  City. 

Baltimore 

Connecticut. . 


Chairman  of  the  Board  of  Com- 
missioners of  the  Sinking 
Funds;  another  chosen  by  the 
School  Committee;  and  a  third 
chosen  by  the  Teachers'  Re- 
tirement Fund  Board 

Superintendent  of  Schools,  Aca- 
demic Principal,  elementary 
school  teacher  and  two  other 
members.  (All  appointed  by 
the  Commissioner  of  Educa- 
tion) 

3  —  State  Superintendent  of 
Schools,  Auditor,  Attorney- 
General 

3  —  Mayor,  Superintendent  of 
Education,  Chairman  of  the 
Board  of  School  Commissioners 


4 — President  of  the  Board  of 
Education,  2  members  of  the 
Board  of  Education,  1  member 
of  the  Department  of  School 
Superintendence 

4 — President  of  the  Board  of 
Education,  Chairman  of  the 
Commission  on  Elementary 
Schools,  Chairman  of  the 
Commission  on  High  Schools, 
City  Superintendent  of  Schools 

4 — Superintendent  of  Schools, 
Comptroller,  2  members  of  the 
Board  of  Education 

3 — Secretary  of  the  Board  of 
Education,  State  Insurance 
Commissioner,  Bank  Com- 
missioner 


2 — President  of 
Principal's  As- 
sociation and 
President  of 
Women  Tea- 
chers'Associa- 
tion 
1 


1 60 


COMPULSORY  PARTICIPATION 


ORGANIZATION  OF  RETIREMENT  BOARDS  HAVING  REPRESENTATIVES  OF  BOTH 

GOVERNMENT  AND  TEACHERS 
II — BOARDS  WITH  TEACHERS'  REPRESENTATIVES  IN  MAJORITY 


Systems 

Total 
Number 
of 
Members 
in  the 
Retire- 
ment 
Board 

Members  Representing  the  State 
or  City 

Members 
Representing 
the 
Teachers 

Illinois  

5 

2  —  SuperintendentofEducation, 

3 

Wisconsin  

5 

State  Treasurer 
2  —  SuperintendentofEducation, 

3 

Michigan  

6 

State  Treasurer 
1  —  Superintendent  of  Education 

5  (1  woman) 

Cleveland  

6 

2  —  Members  of  the  Board  of 

4 

Chicago  

9 

Education 
3  —  Members  of  the  Board  of 

6 

New  Jersey  Re- 
tirement Fund 

New  Orleans  .... 

Boston    Perma- 
nent Fund 

9 
9 
11 

Education 
4  —  SuperintendentofEducation, 
3  members  appointed  by  the 
Governor 
4  —  SuperintendentofEducation, 
3  members  of  the  Board  of 
School  Directors 
5  —  SuperintendentofEducation, 
4  members  of  the  School  Com- 
mission 

5 
5 

6  (3  men  and 
3  women) 

III  —  BOARDS  WITH  EQUAL  REPRESENTATION  OF  THE  GOVERNMENT 
AND  THE  TEACHERS 

Systems 

Total 
Number 
of 
Members 
in  the 
Retire- 
ment 
Board 

Members  Representing  the  State 

Members 
Representing 
the 
.  Teachers 

Massachusetts.  .  . 
Pennsylvania  — 

7 
7 

3  —  Superintendent  of  Education, 
Insurance  Commissioner,  Bank 
Commissioner;    the    seventh 
member    elected  by  the   six 
3  —  Superintendent  of  Schools, 
State  Treasurer,  one  member 
appointed  by  the  Governor; 
the  seventh  elected  by  the  six 

3 
3 

161 


PART  II 

TYPICAL  TEACHERS'  PENSION  SYSTEMS  OF 

TO-DAY 


CHAPTER  XI 
SYSTEMS   WITHOUT   RESERVES 

The  teachers'  pension  systems  existing  in  this  country  num- 
ber nearly  a  hundred.  Yet  only  in  the  case  of  the  Massa- 
chusetts system,  the  New  York  City  system  and  the  recent 
Pennsylvania  system1  were  actuarial  estimates  of  future  lia- 
bilities made  at  the  time  of  establishment.  With  but  few 
exceptions,  therefore,  the  funds  of  the  existing  systems  are 
found,  as  time  goes  on,  to  be  inadequate.  It  will  be  of  interest, 
and  perhaps  no  little  illustrative  value,  to  outline  the  history 
of  certain  of  these  systems. 

In  a  number  of  these  systems  no  reserves  whatever  were 
provided  against  liabilities,  the  government  having  assumed 
the  responsibility  to  pay  pensions  as  they  matured  by  appro- 
priating each  year  the  necessary  amount.  The  characteristic 
features  of  this  "cash  disbursement"  plan  were  discussed  in 
detail  in  a  former  chapter."  All  these  systems  have  com- 
mitted the  grave  error,  to  which  systems  operating  on  the 
cash  disbursement  basis  are  peculiarly  liable,  of  underesti- 
mating the  inevitable  future  growth  of  maturing  pension 
obligations. 

In  most  cases  the  amount  of  the  government's  contribution 
to  these  funds  has  not  been  definitely  limited  by  statute.  This 
fact  frequently  results  in  a  mistaken  impression  on  the  part 
of  the  members  of  the  system,  that  whatever  the  expendi- 
ture of  the  system  in  the  future  may  be,  it  is  always  assured 
of  an  unlimited  backing  by  the  government. 

The  majority  of  the  existing  systems  which  belong  to  this 
type  are  of  recent  origin.  They  have  already  developed  heavy 


the  new  systems  of  New  Jersey,  Ohio  and  Vermont  enacted  in 
April,  1919. 
"See  p.  135*. 

165 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

disbursements,  compelling  the  government  to  limit  its  support. 
Others  have  not  had  sufficient  time  to  develop  considerable 
disbursements,  but  it  will  not  take  long  for  them  to  become 
burdensome  to  the  government.  In  a  number  of  them  the 
amount  which  the  government  disburses  annually  in  pensions 
equals  at  present  only  I  or  2  per  cent  of  the  amount  it  expends 
in  salaries,  but  in  the  future  it  will  reach  15  per  cent  or  even 
more. 

Among  the  twenty-four  systems  selected  for  study  the  half- 
pay  pension  system  of  New  Jersey  and  the  systems  of  Maine 
and  Pittsburgh  fall  in  the  class  of  systems  without  reserves. 

Pittsburgh  Teachers'  Retirement  Association.  The  board 
of  education  of  that  city  established  in  1912  a  retire- 
ment system  by  which  a  teacher  who  had  served  25  years  in 
schools  of  the  United  States,  provided  half  of  this  time  was 
served  in  the  schools  of  Pittsburgh,  would  be  eligible  to  retire- 
ment on  a  pension  of  $500.  No  contributions  were  required 
from  teachers,  the  regulations  providing  that  the  board  of 
education  should  appropriate  each  year  the  amount  needed  to 
pay  the  pensions  of  that  year.  In  the  year  in  which  the  fund 
was  organized  only  thirty-five  retirements  were  made,  but 
during  the  second  and  third  years,  this  number  increased  to 
seventy  and  eighty-five  respectively.  The  rapid  increase  in 
the  appropriation  is  shown  below : 

Annual  Appropriation 
Year  for  Pensions 

IQI2  $  7,000 

1913  32,500 

IQI4  39,400 

1915  49,000 

This  rapid  increase  in  the  cost  of  pensions  to  the  city 
attracted  the  attention  of  the  authorities  and  a  report  of  the 
finance  committee  of  the  board  of  education,  dated  October 
26,  1916,  declared:  "It  has  been  recognized  for  some  time 
that  all  hope  of  continuing  to  add  new  pensions  under  the 
present  plan  must  be  abandoned."  The  board,  therefore, 
discontinued  granting  new  retirements. 

166 


SYSTEMS  WITHOUT  RESERVES 

This  action  aroused  considerable  discussion.  The  teachers 
maintained  that  the  original  regulation  of  the  board  gave  them 
an  absolute  right  to  pensions  after  25  years  of  service  and  that 
the  board  had  no  right  to  revoke  this  regulation.  The  board 
on  the  other  hand  asserted  that  when  the  regulation  was 
adopted  it  contemplated  exercising  its  discretion  and  that  its 
intention  was  perfectly  clear  in  view  of  the  fact  that  the  state 
law  did  not  fix  the  provisions  for  the  various  school  boards, 
but  allowed  each  to  establish  a  pension  system  in  any  manner 
it  might  choose. 

Realizing  that  any  amendment  of  the  old  and  defective 
pension  regulation  would  not  rid  the  financially  unsound  sys- 
tem of  the  danger  of  bankrupting  the  city,  the  board  deter- 
mined to  liquidate  the  old  system  and  to  try  to  find  a  new  one 
which  would  be  financially  sound,  as  generous  as  possible 
to  the  teacher,  and  fair  alike  to  the  two  contributors — the 
taxpayer  and  the  teacher.  A  resolution  was  passed  by  the 
board  on  February  20,  1917,  repealing  the  old  pension  rules 
so  far  as  the  grant  of  new  benefits  was  concerned. 

In  submitting  the  report  of  an  actuary  employed  by  it,  the 
finance  committee  wrote : 

The  committee  made  numerous  attempts  to  provide  a 
financially  safe  method  of  retiring  teachers  at  an  age  earlier 
than  65.  In  every  instance,  however,  the  cost  was  found  to 
be  prohibitive  both  for  the  teacher  and  to  the  public.  You 
will  note  especially  that  the  plan  provides:  i.  That  all  con- 
tributions madej  by  the  teacher  shall,  in  every  event,  be 
returned  to  his  or  her  designated  beneficiaries  with  interest 
compounded  at  4  per  cent.  The  teacher  has,  therefore,  a 
guaranteed  savings  account  in  addition  to  provision  for  a 
pension;  2,  That  the  plan  requires  all  teachers  to  participate; 
3,  That  the  total  payments  made  by  teachers  the  first  year 
would  be  about  $108,054,  and  that  the  total  budget  provision 
to  be  made  by  the  board  to  cover  present  pensions  and  the 
installation  of  this  plan  the  first  year  would  be  $200,000.* 
The  cost  of  retirement  at  age  60  would  be  about  double  each 
of  the  above. 

Including  the  deficiencies  with  respect  to  the  present  force. 

I67 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  teachers  were  to  contribute  according  to  their  age  and 
sex  from  $1.50  to  $11  monthly  towards  their  retirement  on 
a  pension  of  $500  at  age  of  65,  and  the  city  to  contribute 
equivalent  amounts.  These  joint  contributions  were  to  be 
deposited  to  the  individual  account  of  each  teacher  and  to 
draw  compound  interest.  The  rates  of  contributions  were  to 
be  based  upon  standard  mortality  tables  and  the  system  was 
to  operate  on  an  actuarial  reserve  basis. 

The  teachers  objected  to  the  plan  because  it  provided  for 
retirement  only  at  the  age  of  65  and  required  exceedingly 
high  contributions.  Thereupon,  the  committee  on  retirement 
prepared  another  report  in  which  it  proposed  the  following 
modifications  of  the  original  plan:  first,  a  provision  by  which 
all  teachers  above  40  years  of  age  would  be  required  to  con- 
tribute at  the  rate  fixed  for  age  40,  i.  e.  a  limitation  of  the 
teachers'  contributions  to  a  maximum  of  $5.20  per  month 
instead  of  $11.45  P61"  month  as  under  the  first  plan,  and 
second,  an  option  to  retire  between  60  and  65  on  a  reduced 
pension.  The  scale  of  pensions  was  to  be  as  follows : 

Age  Pension 

65  $500 

64  440 

63  395 

62  355 

61  320 

i               60  300 

The  teachers  gave  no  better  reception  to  this  revised  plan 
than  they  had  to  the  first  plan.  They  objected  to  it  "because 
of  the  age  requirement  of  65  years,  and  the  small  annuity  at 
60  years  of  age."1  The  report  of  the  citizens'  committee 
stated  that1  "the  teachers  desire  a  pension  of  $500  at  retire- 
ment age  of  60,  but  are  unwilling  or  unable  to  pay  the  higher 
rates"  required  for  such  a  pension  at  that  age.  The  city  is 
willing  to  contribute  at  the  rates  required  for  a  $500  pension 

'Meeting  of  the  Pittsburgh  Teachers'  Association,  Feb.  13,  1917.  Min- 
utes of  the  Pittsburgh  Board  of  Education,  Feb.  20,  1917,  p.  282. 

'Report  on  Teachers'  Pensions.    Published  in  pamphlet  form  Jan.  23, 1917. 

168 


SYSTEMS  WITHOUT  RESERVES 

at  65  years  of  age  and,  furthermore,  to  assume  the  payment 
of  that  part  of  the  teachers'  contributions  which  is  above 
$5.20,  besides  assuming  the  entire  obligation  aggregating 
about  $600,000  on  account  of  the  1 10  annuitants  retired  under 
the  old  pension  system,  and  considers  it  inexpedient  for  the 
present  to  go  any  further  in  its  liberality. 

Whether  the  proposed  system  is  adopted  in  its  present  form, 
or  further  modified,  or  not  adopted  at  all,  it  is  clear  that  the 
old  unsound  system  can  never  be  revived ;  the  city  will  either 
establish  a  sound  system  or  it  will  join  the  new  state- wide 
system  of  Pennsylvania. 

New  Jersey  3 5- Year  Service  Pension  System.  The  agita- 
tion for  a  "service  pension  payable  entirely  at  public  expense, 
and  without  any  contribution  from  the  teachers,"  began  in 
New  Jersey  in  the  early  nineties  but  suffered  a  severe  defeat 
at  that  time.  Instead  of  a  service  pension  a  teachers'  retirement 
fund,  supported  entirely  by  the  teachers  themselves,  was  estab- 
lished. The  agitation  for  a  service  pension,  however,  con- 
tinued and  achieved  its  first  success  in  1903  in  a  rather  acci- 
dental way. 

Some  time  in  1902,  or  in  the  beginning  of  1903,  a  certain 
teacher,  who  had  taught  in  Jersey  City  for  more  than  40 
years  and  had  many  friends  in  that  city,  met  with  a  severe 
accident.  It  appeared  that  he  was  permanently  incapacitated 
and  would  never  be  able  to  return  to  teaching.  A  group  of 
teachers  in  that  city  attempted  to  obtain  a  pension  for  his 
benefit,  as  the  school  authorities  had  no  power  to  grant  one. 
The  teachers,  therefore,  appealed  to  the  legislature  to  give  the 
school  authorities  the  power.  The  bill  framed  by  the  teachers 
without  providing  a  special  fund  for  the  purpose  allowed  any 
district  board  of  education  to  pension  on  half  pay  any  teacher 
who  had  served  for  more  than  40  years  consecutively  in  the 
same  district,  thus  exactly  covering  the  case  of  the  particular 
teacher  in  question.  The  measure  became  a  law  on  March 
5.  1903- 

169 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

It  is  curious  to  note  that  after  the  enactment  of  this  law, 
the  teacher,  for  whose  special  benefit  it  was  passed,  refused  to 
avail  himself  of  the  pension. 

The  requirements  of  the  law  were  so  high,  and  its  pro- 
visions so  particular,  that  for  the  next  three  years  only  two 
other  teachers  could  qualify  for  the  pension  offered  by  it. 

In  1905,  a  recommendation  was  made  by  an  actuary  to  a 
special  committee,  which  investigated  the  Teachers'  Retirement 
Fund,  (another  retirement  system  in  New  Jersey  which  is  dis- 
cussed in  the  following  chapter)  that  the  law  be  so  changed  as 
to  forbid  any  teacher  receiving  a  "service  pension"  from  the 
board  of  education  to  receive  also  an  "annuity"  from  the  fund. 
The  enactment  of  such  an  amendment  would  have  prevented 
the  duplication  of  benefits  which  later  on  developed.  The 
recommendation  was,  however,  disregarded  and  on  the  con- 
trary a  resolution  was  adopted  at  the  meeting  of  the  State 
Teachers'  Association  directing  its  committee  to  secure  an 
amendment  which  would  broaden  the  scope  and  lower  the 
service  requirements  of  the  law.  This  was  attained  a  few 
months  later  in  1906,  when  an  amendment  was  obtained  lower- 
ing the  requirements  to  35  years  of  service  of  which  only  20 
years  had  to  be  in  the  same  district.  This  opened  the  system 
to  a  much  larger  group  of  teachers,  and  during  the  following 
three  months  five  teachers  applied  for  retirement  and  received 
the  pension.  The  number  of  pensions  increased  from  seven 
to  twenty-six  during  the  following  year  and  continued  to 
increase  rapidly  from  year  to  year  as  shown  below : 

Year  Ending  Number  of  Pensioners 

June  30  on  the  Retired  List 

1906  7 

1907  26 

1908  48 

1909  65 

1910  100 

1911  125 

1912  155 

1913  185 

1914  222 

I/O 


SYSTEMS  WITHOUT  RESERVES 

Meantime,  in  1907,  1911  and  1912  three  other  amend- 
ments had  been  passed.  The  first  allowed  not  only  the  local 
boards  of  education  but  also  any  other  body  employing 
teachers  to  grant  pensions;  the  second  lowered  still  further 
the  requirements  by  giving  credit  for  service  rendered  in 
any  other  state;  and  the  third  broadened  the  interpretation 
of  the  service  covered  to  include  all  persons  "employed  in  the 
public  school  work." 

Until  1914  the  system  was  entirely  local  in  its  support  and 
control.  In  that  year  an  amendment  provided  for  the  central 
administration  of  the  system  by  the  state  commissioner  of 
education,  and  further  liberalized  the  retirement  conditions. 
The  requirement  of  20  years  of  service  in  the  district  in  which 
the  teacher  applied  for  retirement  was  also  struck  out  of  the 
law;  the  only  limitation  was  that  a  teacher  must  have  served  25 
of  the  35  years  in  New  Jersey.1  "Teacher-clerks  and  any  per- 
son employed  in  any  supervisory  capacity,"  who  had  not  pre- 
viously been  subject  to  the  law  were  now  admitted  to  its  bene- 
fits. The  funds  necessary  for  the  payment  of  pensions  were 
to  be  supplied  from  the  apportionment  from  railroad  tax 
devoted  to  the  maintenance  and  support  of  schools  which 
the  comptroller  distributed  among  the  several  counties. 

The  result  of  the  provisions  of  1914  was  that  the  number 
of  pensioners  and  the  total  payments  increased  at  a  still  more 
rapid  rate  as  shown  in  the  following  table: 

Year  Ending  Pensioners  on  Amount  of 

June  30  the  Retired  List  Pension  Roll 

1915  275  $150,000 

1916  348  176,000 

1917  369  211,000 

1918  417  246,000 

At  no  time  either  before  the  establishment  of  the  system 
or  in  the  course  of  its  subsequent  amendment  were  the  ques- 

'The  teacher  was  made  eligible  to  retirement  under  the  following  con- 
ditions :  After  35  years  of  active  service,  25  of  which  must  have  been  per- 
formed in  the  state ;  or  after  70  years  of  age,  if  the  last  20  years  have  been 
served  in  the  state;  or  after  75  years  of  age,  if  32  years  have  been  served 
in  the  state;  or  after  35  years  of  service  and  70  years  of  age,  in  case  of 
disability. 

171 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

tions  raised:  What  does  the  half -pay  pension  cost?  What 
liabilities  are  assumed  under  the  system,  and  what  additional 
liabilities  will  accrue  if  the  proposed  amendments  are  enacted  ? 
In  short,  the  system  was  established  by  chance,  and  was  modi- 
fied in  an  off-hand  way  without  any  consideration  paid  to  the 
financial  obligations  assumed. 

Since  the  retirement  fund  (described  below1)  offered  a  bene- 
fit of  60  per  cent  of  salary,  and  the  state  pension  offered  50 
per  cent  of  salary,  a  teacher  who  could  qualify  under  the 
two  systems  and  whose  salary  was  below  $1300  could  receive 
in  the  form  of  the  two  benefits  more  than  the  amount  of  his 
salary.  Such  a  prospect  was  very  attractive.  Teachers  who 
had  35  years  of  service  but  were  still  capable  of  teaching,  and 
who  would  not  have  applied  for  retirement  if  they  were 
entitled  only  to  half  pay,  were  now  eager  to  retire.  On  the 
other  hand,  the  teachers  who  could  no  longer  perform  their 
duties  efficiently,  but  who  had  not  completed  35  years  of  serv- 
ice, and  who,  therefore,  could  by  retiring  obtain  only  the 
annuity,  but  not  the  pension,  were  anxious  to  postpone  their 
retirement  until  the  time  when  they  could  qualify  for  both. 
The  efficiency  of  the  service  thus  suffered  on  account  of  early 
retirement  of  efficient  teachers  as  well  as  from  the  postponed 
retirement  of  invalids. 

In  1917,  the  legislature  appointed  a  commission  to  investi- 
gate all  the  pension  and  retirement  systems  operating  in  New 
Jersey.  Believing  that  it  was  important  that  the  state  should 
know  what  its  total  liabilities  were,  the  commission  had  an 
actuarial  estimate  carefully  prepared.  This  estimate  showed 
that  the  cost  of  the  half -pay  pension  on  a  reserve  basis  would 
amount  to  about  4  per  cent  of  the  payroll  for  new  entrants 
and  that  the  liabilities  on  account  of  the  then  400  pensioners 
amounted  to  about  $2,150,000,  and  the  total  liabilities  on 
account  of  present  pensioners  and  the  prospective  pensioners 
among  the  present  teachers  amounted  to  about  $24,350,000. 
If  the  system  continued  to  operate  without  providing  an  ade- 

"See  page  183. 

172 


SYSTEMS  WITHOUT  RESERVES 

quate  reserve,  the  annual  requirements  for  pensions,  which 
now  amounted  to  a  few  hundred  thousand  dollars  and  to 
slightly  more  than  il/2  per  cent  of  the  pay  roll,  would  in  a  not 
distant  future  amount  to  more  than  a  million  dollars  and  the 
annual  requirements  would  exceed  10  per  cent  of  the  pay  roll. 
It  is  plain  that  to  prevent  this  tremendous  increase  of  the 
burden,  the  system  will  have  to  be  reorganized.  It  is  prob- 
able that  at  the  time  of  reorganization  the  question  will  be 
considered  whether  it  will  not  be  wise  to  supplant  the  two 
unsound  systems, — the  state  pension  and  the  retirement  fund, 
— by  one  sound  system  supported  by  joint  contributions  of 
the  state  and  the  teachers  and  jointly  controlled  by  them.1 

Maine  School  Pension  Fund.  This  is  a  fund  in  name 
only,  for  it  has  no  capital.  It  is  supported  by  a  small  appro- 
priation by  the  state  from  the  school  and  mill  tax  fund.  The 
teachers  do  not  contribute. 

The  plan  of  this  system  was  prepared  by  a  special  com- 
mittee appointed  for  that  purpose  by  the  Maine  Teachers' 
Association,  and  was  revised  by  the  members  of  the  legisla- 
ture. It  provided  for  an  appropriation  of  $8,000  the  first 
year  and  $25,000  annually  thereafter  with  which  to  pay  pen- 
sions of  $150  to  $250  according  to  length  of  service.  One  of 
the  important  changes  made  during  the  revision  of  the  bill 
provided  for  the  grant  of  half  pensions  to  teachers  who  were 
retired  before  the  enactment  of  the  law.  A  provision  of  this 
kind  is  very  rarely  included  in  a  pension  system,  for,  aside 
from  the  question  of  the  wisdom  of  a  retroactive  measure,1  it 
increases  the  immediate  burdens  of  the  system. 

The  bill  was  passed  on  March  19,  1913."  The  fixed  amount 
of  the  annual  appropriation  is  one  of  the  weakest  features  of 
the  law.  The  experience  of  Maine  will  doubtless  prove  similar 
to  that  of  other  funds  in  that  the  amount  of  annual  disburse- 

"Such  a  reorganization  was  effected  by  legislative  enactment  on  April 
10,  1919,  as  described  in  Chapter  XVIII. 

"See  page  199  for  a  similar  provision  in  Virginia. 
'Maine,  Acts,  1913,  ch.  75. 

173 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ments  will  grow  from  year  to  year.  In  the  second  year  of 
the  operation  of  this  system  thirty-five  new  pensions  were 
added  while  only  twelve  were  terminated  and  the  pension  roll 
carried  $22,251,  a  sum  dangerously  near  the  limit  allowed  by 
law.  Out  of  this  amount  over  $12,000 — more  than  50  per 
cent  of  the  total — was  expended  on  half  pensions  to  150 
teachers  who  had  retired  before  the  enactment  of  the  law. 

It  became  evident  at  the  beginning  of  the  year  1917  that 
the  disbursements  of  that  year  would  exceed  the  $25,000 
limit.  Upon  the  recommendation  of  the  state  superintendent 
the  legislature  increased  its  appropriation  to  $27,500.  As 
disbursements  increase  each  year  a  larger  appropriation  must 
be  requested.  The  state  thus  cannot  long  continue  to  bear  the 
increasing  burden,  no  part  of  which  is  borne  by  the  teachers. 
The  teachers  too  must  sooner  or  later  realize  that  it  is  to  their 
advantage  to  contribute  to  the  system  in  order  to  receive  from 
it  an  additional  benefit  besides  the  small  pension  provided  by 
the  state. 


174 


CHAPTER  XII 

SYSTEMS  WITH  INADEQUATE  RESERVES: 

STATE   SYSTEMS  ] 

As  already  indicated  the  systems  which  have  totally  failed 
to  recognize  the  necessity  for  a  reserve  are  but  few  in  number. 
In  most  systems  this  necessity  has  been  appreciated  but  very 
inadequately.  It  has  been  thought  of  in  the  terms  of  protec- 
tion against  some  unexpected  exigency  and  a  source  of  supple- 
mentary revenue.  The  annual  pension  payments  are  met  as 
they  mature  from  the  annual  receipts  of  the  system,  i.  e.  by 
the  "cash  disbursement"  method.  The  left-overs  of  the  annual 
receipts  (the  so-called  "surpluses")  are  set  aside  and  are  in- 
vested and  form  the  so-called  "reserve." 

The  latter  does  not  act  as  a  true  reserve,  which  is  built  from 
practically  all  receipts  of  the  system  and  which  serves  as  the 
source  for  meeting  all  pension  obligations  and  the  main  basis 
of  all  its  financial  operations.  It  plays  an  entirely  subordinate 
role  in  the  operation  of  the  system — a  kind  of  appendix  rather 
than  the  foundation  of  the  system.  Being  so  conceived  and 
supported  by  the  residues  of  a  usually  meager  income  it  is  nat- 
urally inadequate  to  protect  the  system  against  future  heavy 
demands  and  assure  its  solvency.  Of  the  twenty- four  systems 
selected  for  study  seventeen  are  of  this  type.  They  are  as 
follows : 


STATES 

CITIES 

I. 

Illinois                       e 

it.  i 

n  1915 

i. 

Chicago                     e 

st.  i 

n  1896 

2. 

New  York 

' 

1911 

2. 

Philadelphia 

1907 

3- 

New  Jersey  Ret.  F.  ' 

< 

1896 

3- 

Cleveland 

1907 

4- 

Minnesota 

IQI5 

4- 

Boston  Ret.  F. 

1900 

5- 

Wisconsin 

1911 

5. 

Boston  Per.  F. 

1908 

6. 

California 

IQI3 

6. 

Baltimore 

1909 

7- 

Virginia 

1908 

7- 

Buffalo 

< 

1896 

8. 

Michigan 

I9IS 

8. 

New  Orleans 

< 

1910 

9- 

Denver 

1 

1909 

175 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

In  the  systems  of  Virginia,  Chicago,  Buffalo,  New  Orleans, 
the  two  systems  of  Boston,  in  the  old  system  of  New  York 
City,  in  the  New  Jersey  Retirement  Fund,  altogether  in  eight 
of  the  seventeen  systems,  the  disbursements  have  at  one  time 
or  another  exceeded  their  statutory  income,  which  has  resulted 
in  a  reduction  of  benefits,  in  the  discontinuance  of  new  retire- 
ments, and  in  the  introduction  of  new  laws  to  relieve  the 
situation. 

The  other  systems,  nine  in  number,  are  still  very  recent. 
This  is  the  only  reason  why  they  have  not  as  yet  failed.  The 
systems  of  Illinois,  Minnesota,  Michigan  and  California  have 
had  but  a  short  existence,  but  the  first  two  are  already  under 
investigation.  The  New  York  and  Wisconsin  systems  were 
established  in  1911,  those  of  Baltimore  and  Denver  in  1909, 
of  Philadelphia  and  Cleveland  in  1907.  All  these  are  still 
in  the  accumulative  stage.  Their  revenues  still  exceed  their 
disbursements  and  yield  balances  which  create  an  impression 
of  apparent  prosperity  and  financial  security.  But  soon  their 
growing  disbursements  will  exceed  their  revenues;  and  then 
these  funds,  like  those  of  Virginia,  New  York  and  Boston, 
and  others  mentioned  above,  will  be  in  a  critical  condition 
and  will  start  on  a  rapid  decline.  A  better  idea  of  the  finan- 
cial condition  of  these  systems  may  be  formed  if  each  is  dis- 
cussed separately.  A  separate  analysis  of  each  fund  is,  there- 
fore, presented  below,  the  Chicago  fund  being  described  in 
a  separate  chapter. 

The  financial  arrangements  for  all  the  other  funds  in  this 
country  which  have  inadequate  reserves  are  similar  to  those 
of  the  systems  which  are  analyzed  in  detail  in  the  following 
pages.  The  bankruptcies  or  sudden  reductions  of  benefits 
which  resulted  from  these  arrangements  in  Minneapolis,  Mil- 
waukee, Providence  and  Newport  are  similar  to  those  devel- 
oped in  New  York  City  and  Boston. 

Illinois  Teachers'  Pension  and  Retirement  Fund.     This 
system  became  effective  on  July  I,  1915,  and  is  compulsory 

176 


SYSTEMS  WITH  INADEQUATE  RESERVES  :   STATE 

on  those  subsequently  entering  the  service.  Teachers  in  the 
service  at  the  time  of  enactment  have  the  option  until  Sep- 
tember i,  1920,  to  become  members.  Up  to  June  30,  1916, 
only  about  1,500  of  the  total  number  of  about  22,500  teachers 
in  the  state  elected  to  join.  They  were  undoubtedly  the  older 
teachers  who  expected  to  retire  immediately  or  in  a  few  years. 
Approximately  1,600  teachers  newly  entering  the  service  auto- 
matically became  contributors.  The  total  membership,  there- 
fore, then  numbered  about  3,000  teachers. 

Up  to  June  30,  1916,  a  total  of  301  teachers  were  retired 
on  the  full  annuity  of  $400.  Of  this  number  225  were  women 
and  76  were  men.  Twenty  persons  were  retired  because  of 
disability  on  a  smaller  annuity  in  proportion  to  the  number 
of  years  served.  The  majority  of  the  retirements  were 
granted  at  the  close  of  the  year.  The  expenditures  during 
1916  were,  therefore,  very  smjall;  they  amounted  to  only 
about  $8,500.  The  disbursements  of  1917,  however,  were 
considerable  since  the  annuity  roll  amounted  to  more  than 
$120,000. 

The  system  is  managed  by  a  board  of  trustees  consisting 
of  five  members,  the  superintendent  of  public  instruction,  the 
state  treasurer  and  three  contributors  or  annuitants  elected 
by  the  contributors  and  annuitants. 

An  annuity  of  $400  is  granted  on  retirement  after  25  years 
of  service  (of  which  a  minimum  of  15  years  must  have  been 
taught  in  the  schools  of  Illinois),  provided  the  applicant  is 
at  least  50  years  of  age.  A  proportionately  reduced  annuity 
is  paid  on  disability  retirement  after  15  years  of  service.  The 
applicant  must  have  contributed  in  all  $400,  or  else  pay  the 
deficiency  with  4  per  cent  interest.  No  refunds  of  contribu- 
tions or  other  benefits  are  granted  upon  resignation,  dismissal 
or  death. 

The  income  of  the  fund  is  derived  from  two  sources — the 
members  of  the  fund  and  the  state.  The  members  contribute 
according  to  the  number  of  years  they  have  taught;  those 

177 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

with  less  than  10  years  contribute  $5  per  year;  those  with 
more  than  10  years  but  less  than  15  years,  $10;  and,  finally, 
those  with  more  than  15  years  of  teaching  experience  con- 
tribute $30  per  year.  No  teacher  is  required  to  contribute  for 
more  than  25  years.  The  state  contributes  an  amount  equal 
to  one-tenth  per  mill  of  the  assessed  valuation  of  property. 

A  few  months  after  the  system  was  established  it  came 
under  the  investigation  of  the  Illinois  Pension  Laws  Commis- 
sion, together  with  the  police,  firemen  and  other  systems 
operating  in  Illinois,  and  the  following  quotation  from  its 
report  which  refers  to  the  unsound  condition  of  all  the  pen- 
sion systems  in  Illinois,  including  the  state  teachers'  system, 
is  interesting: 

The  general  condition  of  pension  systems  operating  under 
the  laws  of  Illinois  may  be  correctly  described  as  one  of  insol- 
vency. That  is  to  say,  viewed  from  the  standpoint  of  sound 
finance  and  of  having  the  necessary  reserves  to  carry  out  the 
payment  of  pensions  as  provided  in  the  laws,  there  are 
immense  deficiencies  in  the  existing  funds.  In  short,  the 
financial  provisions  are  entirely  inadequate  for  paying  the 
stipulated  pensions  when  due.  It  may  be  well  to  emphasize 
here  that  there  is  nothing  more  erroneous  than  the  common 
view  that  so  long  as  the  amount  in  a  pension  fund  is  increas- 
ing all  is  well  with  it.  To  be  sure,  some  of  these  funds  are 
increasing,  but  that  is  no  indication  of  their  sufficiency,  and  it 
is  strange  how  completely  satisfying  such  increase  is  to  many 
participants  even  if  the  fund  is  certainly  inadequate.1 

According  to  the  estimate  of  the  commission  the  ultimate 
annual  pension  payments  under  the  present  system  will  amount 
to  between  7  and  12  per  cent  of  the  annual  salary  payments. 
Yet  the  fund  is  provided  with  a  teachers'  contribution  which 
averages  only  a  little  over  I  per  cent  of  the  annual  salary 
payments,  and  will  in  the  future  average  a  lesser  proportion 
as  salaries  increase.  True,  disbursements  of  from  7  to  12 
per  cent  will  not  be  required  for  a  number  of  years.  In  the 
beginning  the  fund  will  bevmore  than  sufficient  to  pay  the 

Illinois  Pension  Laws  Commission  Report,  1917,  p.  272. 

178  A 


SYSTEMS  WITH   INADEQUATE  RESERVES:   STATE 

pensions  of  retiring  teachers,  especially  in  view  of  the  fact 
that  the  membership  of  the  fund  and  its  disbursements  are 
small  and  that  the  state  appropriation  augments  the  fund. 
Soon,  however,  an  amendment  of  the  law  will  become  neces- 
sary which  will  give  another  oportunity  for  those  to  enter  the 
fund  who  did  not  enter  it  in  1915.  So  long  as  the  teachers' 
contributions  are  fixed  at  an  almost  insignificant  rate,  every 
additional  member  will  increase  the  liabilities  of  the  fund 
without  proportionately  increasing  the  assets  and  will  add  a 
new  claim  against  future  state  appropriations  which  are 
limited  to  a  small  portion  of  the  mill  tax.  The  disbursements 
will  increase  at  a  more  rapid  rate  than  the  income  and  will 
eventually  exceed  it.  It  is  very  probable,  however,  that  the 
managers  of  the  system  with  the  aid  of  an  enlightened  public 
opinion  will  bring  about  a  reorganization  of  the  system  on  a 
sound  basis  long  before  this  happens.  One  of  the  officers  of 
the  fund  has  recently  stated  that  the  law  "needs  revising  inas- 
much as  there  is  no  provision  made  for  an  actuarial  investi- 
gation and  the  age  for  retirement  is  perhaps  too  low.  It  seems 
to  me  that  any  sound  permanent  retirement  fund  must  be 
founded  upon  actuarial  investigation  and  a  thorough  research, 
such  as  would  lead  to  the  cost  of  maintenance  of  the  fund." 

New  York  State  Teachers'  Retirement  Fund.  In  the 
year  1910  the  State  Teachers'  Association  of  New  York,  the 
Academic  Principals  Association,  and  the  Council  of  Super- 
intendents appointed  a  committee  to  get  in  touch  with  the 
education  department  in  order  to  prepare  a  bill  and  to  secure 
its  enactment.  The  bill  introduced  passed  the  legislature  on 
June  26,  1911  and  was  amended  in  1913  and  I9I4-1 

The  law  applies  to  all  teachers  except  those  covered  by  local 
funds.  The  law  provides,  however,  that  the  state  fund  must 
take  over  any  local  fund  if  more  than  two-thirds  of  the 
teachers  of  the  respective  locality  vote  in  favor  of  a  merger. 

'New  York,  Acts,  1911,  ch.  449;  1913,  ch.  511;  1914,  ch.  44. 

179 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  following  retirement  funds  have  availed  themselves  of 
this  provision  and  have  been  merged  with  the  state  fund : 
Poughkeepsie established  in  1902 


Niagara  Falls. 

Troy  

Elmira   and    Schenectady 

Watervliet  and  Yonkers 

Nassau  and  Saratoga  Counties. 


1904 
1906 
1907 
1908 
1910 


The  following  cities  and  county  still  have  local  funds  and 
remain  outside  of  the  state  system : 

New  York  City established  in  1894 


Buffalo 1896 

Syracuse    1897 

Rochester   1905 

Albany    1907 

Cohoes    1908 

Mt.  Vernon   1909 

Westchester  County  (except  Yonkers) 1909 

The  board  of  retirement  consists  of  five  members  all  of 
whom  are  appointed  by  the  commissioner  of  education;  one 
of  them  at  the  time  of  appointment  must  be  a  superintendent 
of  schools,  one  an  academic  principal,  and  one  an  elementary 
school  teacher.  One  of  the  five  must  be  a  woman. 

An  annuity  of  one-half  of  the  average  salary  of  the  last 
five  years  (max.  $600)  is  provided  upon  retirement  after  a 
minimum  of  25  years  of  service,  of  which  the  last  15  must  have 
been  served  in  the  schools  in  the  state.  Proportionately 
smaller  annuities  are  paid  on  disability  after  minimum  of  15 
years'  service.  No  refunds  of  contributions  are  made  to  those 
who  resign  or  are  dismissed  or  to  the  dependents  of  those 
who  die. 

These  benefits  were  to  be  paid  out  of  a  fund  derived  from 
a  i  per  cent  deduction  from  teachers'  salaries.  The  unex- 
pended balances  were  to  be  set  aside  each  year  to  build  up 
the  capital  of  the  fund.  No  estimates  of  the  cost  of  benefits 
were  made.  The  commissioner  of  education  stated  in  1913 
that  "there  is  not  reliable  data  at  the  present  time  to  determine 
accurately  the  number  of  teachers  in  the  state  who  are  entitled 
to  be  retired  under  this  law  or  the  amount  required  to  meet 

180 


SYSTEMS  WITH   INADEQUATE  RESERVES:   STATE 

annuities."1  It  was  estimated,  however,  that  if  out  of  1,200 
teachers,  who  had  more  than  25  years'  service,  300  should  re- 
tire, the  income  would  exceed  the  disbursements  by  about 
$25,000,  and  that  if  600  should  retire  a  deficiency  of  more  than 
$40,000  would  appear.  But  even  this  indefinite  computation 
covered  only  one  year  and  did  not  take  into  account  the  fact 
that  a  rapid  increase  in  the  disbursements  was  bound  to  de- 
velop. A  faint  suspicion  that  the  fund  might  prove  insufficient 
to  pay  all  annuities  is  evidenced  in  the  following  passage  in  the 
commissioner's  report  :2 

It  has  been  confidently  believed  by  those  who  have  been 
giving  this  matter  careful  attention  for  two  or  three  years 
that  sufficient  endowments  will  be  made  to  the  fund  to  avoid 
the  necessity  of  the  legislature  making  appropriations  to  meet 
deficiencies.  It  would  be  a  deserved  compliment  to  the  teach- 
ing force  of  the  state  if  some  of  our  public  spirited  citizens 
should  make  sufficient  gifts  or  endowments  to  this  fund  to 
make  the  income  sufficient  to  pay  all  annuities. 

It  was  thus  hoped  that  should  the  fund  be  threatened  with 
disaster  private  philanthropy  would  come  to  the  rescue.  Had 
an  actuarial  investigation  of  the  fund  been  made  at  that  time, 
it  would  have  shown  that  disbursements  were  bound  to  exceed 
the  receipts  from  the  i  per  cent  contribution,  and  that  annual 
deficiencies  instead  of  surpluses  were  bound  to  develop  and 
disaster  result  in  five  or  six  years. 

During  the  first  year  only  ten  retirements  were  made,  the 
disbursements  amounted  to  only  $2,000,  and  the  greater  part 
of  the  income  was  unexpended  and  carried  to  investment. 
During  the  second  year,  however,  the  number  of  retirements 
jumped  from  10  to  152  and  the  disbursements  from  $2,000 
to  over  $40,000.  In  view  of  this  alarming  increase  it  became 
apparent  that  the  income  would  soon  be  insufficient,  and  an 
appeal  was  made  to  the  legislature  to  contribute  to  the  fund 
an  amount  equal  to  the  teachers'  contributions.  An  act  to 
this  effect  was  passed  in  1914,  and  as  a  result  of  the  new  law 


aReport,  1912,  p.  27. 
2Report,  1912,  p.  28. 


181 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  contributions  in  1915  were  at  once  doubled.  This  increase 
has  postponed  for  the  time  being  the  disaster  which,  however, 
is  bound  to  happen  within  a  few  years. 

The  following  figures  illustrate  the  rapid  increase  in  the 
number  of  retirements  and  the  amounts  of  disbursements  dur- 
ing the  last  four  years.  The  total  number  of  retirements 
rose  from  about  150  in  July,  1913,  to  almost  700  in  July,  1917, 
and  the  amount  of  annual  disbursements  grew  during  the 
same  period  from  $40,000  to  almost  $200,000.  The  retire- 
ment board  then  adopted  a  resolution  raising  the  require- 
ments for  service  retirement  so  that  an  applicant  who  is  not 
disabled  must  either  have  35  years  of  service  and  be  60  years 
of  age,  or  if  he  has  less  than  35  years  (but  more  than  25), 
must  be  65  years  of  age. 

A  bill  was  also  introduced  in  the  legislature  making  dis- 
cretionary the  acceptance  by  the  state  fund  of  any  local  fund 
which  desires  to  merge  with  it.  The  point  is  that  some  of 
the  local  funds  having  been  longer  in  operation  are  nearer 
collapse  than  is  the  state  fund.  The  legislative  committee, 
however,  refused,  and  justly  so,  to  endorse  any  measure  except 
one  which  would  provide  for  a  reorganization  of  the  insolvent 
system.  It  held  that  the  proposed  measure  would  merely  help 
to  postpone  reorganization  and  result  in  the  increase  of  the 
deficiency  which  the  future  generations  will  have  to  discharge. 

The  officers  responsible  for  the  management  of  the  state 
system  have  endorsed  the  actuarial  reorganization  of  the 
New  York  City  system.  They  appreciate  the  imperfection 
of  their  own  system  and  contemplate  placing  it  on  an  actuarial 
basis.  The  considerable  actuarial  data  compiled  by  the  New 
York  City  commission  and  the  scientific  pension  plan  which  it 
prepared  after  a  three-year  study  of  the  problem  will  un- 
doubtedly facilitate  their  difficult  task. 

The  sooner  the  reorganization  is  effected,  the  better  it  will 
be  for  the  majority  of  the  teachers  who  are  inadequately  pro- 
tected under  the  present  system;  for  the  longer  it  operates 

182 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

the  larger  will  be  the  number  of  teachers  with  claims  of 
"vested  rights"  in  it. 

The  following  sets  forth  the  principal  facts  relative  to  the 
New  York  state  system  in  April,  1917. 

Membership   24,000 

Number  of  annuitants 669 

Annuity  roll $187,182 

Capital  572,000 

Average  age  at  retirement 57  years 

Average  length  of  service 31  years 

New  Jersey  Teachers'  Retirement  Fund.  The  New  Jer- 
sey Teachers'  Retirement  Fund  is  the  first  state-wide  sys- 
tem for  the  retirement  of  teachers  to  be  established  in  this 
country.1  It  provides  an  annuity  of  60  per  cent  of  the  average 
salary  for  the  last  five  years  (min.  $250,  max.  $650)  upon 
retirement  after  20  or  more  years  of  service,  if  the  teacher 
can  prove  disability.  The  fund  operates  on  a  tontine  basis, 
no  refunds  of  contributions  or  other  benefits  being  provided 
for  those  who  resign,  or  are  dismissed,  or  who  die  before 
completing  the  required  period  of  service.  It  is  managed 
by  a  board  consisting  of  nine  members — the  superintendent 
of  public  instruction,  three  members,  not  teachers,  appointed 
by  the  governor,  and  five  teachers  elected  by  the  members  of 
the  fund.  The  financial  history  of  the  fund  during  the 
twenty-one  years  of  its  operation  may  be  divided  into  four 
periods.  These  periods  were  identical  in  their  leading  aspects 
— each  began  with  an  excess  of  income  over  disbursements 
only  to  have  the  latter  reach  or  outstrip  the  regular  income. 

The  fund  was  opened  on  a  voluntary  basis  in  1896  with 
a  membership  of  about  2,500  teachers  out  of  a  total  of  about 
5,000.  The  income  was  to  consist  of  a  contribution  by  the 
members  of  I  per  cent  of  their  salaries.  .  In  addition,  i  per 
cent  was  deducted  from  the  annuities  granted  and  it  was 
hoped  to  augment  the  regular  income  by  obtaining  donations 
and  legacies  and  arranging  bazaars  and  entertainments.  No 
disbursements  were  made  during  the  first  year.  Thirty-five 
hundred  dollars  were  paid  out  the  second  year  and  almost 

*The  history  of  its  establishment  was  described  at  length  on  page  38. 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

$5,000  during  the  third  year.  The  membership  not  only 
did  not  increase  but  even  declined,  and  the  districts  were 
irregular  in  transmitting  the  dues.  The  increase  in  the  dis- 
bursements with  the  resulting  reduction  in  the  annual  surplus 
is  shown  below:1 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements  (Excess  of  Income 

Over  Disbursements) 

1897  $12,400  $12,400 

1898  15,300  $3,500'  11,800 

1899  I3,30O  4,7003  8,60O 

The  decrease  in  the  membership  and  the  annual  surplus 
was  alarming.  It  was  apparent  that  in  a  few  years  the  dis- 
bursements would  overtake  the  income  unless  membership 
was  increased  or  new  sources  were  added,  or  retirements 
restricted. 

Accordingly  in  1899  an  amendment  was  secured  extending 
membership  to  teachers  who  had  not  become  members  in 
1896  and  who  might  now  wish  to  enter,  and  containing  certain 
restrictions  as  to  retirement.  A  permanent  organization  was 
effected  for  conducting  membership  campaign's  and  soliciting 
funds.  Through  the  energetic  efforts  of  this  organization  the 
membership  was  increased  and  the  income  supplemented  from 
special  entertainments  which  were  arranged  and  from  dona- 
tions and  legacies  which  were  obtained.  These  sources  yielded 
almost  $7,000  in  1900  and  over  $3,000  in  1901.  During  the 
succeeding  two  years,  however,  the  increase  in  the  disburse- 
ments exceeded  the  increase  in  the  income,  with  a  result  that 
the  surplus  decreased,  as  shown  below,  falling  under  the 
amount  which  was  set  aside  at  the  end  of  the  first  period : 

It  thus  became  apparent  that  the  previous  increase  of  income 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements1  (Excess  of  Income 

Over  Disbursements) 
IOOO  $2I,IOO  $8,20O  $I2,OOO 

1901  20,8OO  10,400  IO,4OO 

1902  2O,30O  I2,6OO  6,7OO 

aThe  figures  in  this  and  the  following  tables  are  compiled  in  round 
numbers  to  the  nearest  hundred  from  the  figures  given  in  the  N.  J.  School 
Report,  1913  (vol.  i,  p.  506-7). 

"Includes  administrative  expense,  $2,600  in  1808  and  $1,200  in  1899. 

'Includes  administrative  expense:  $1,700  in  1900,  and  $1,800  annually  the 
following  two  years. 

184 


SYSTEMS  WITH   INADEQUATE  RESERVES:   STATE 

was  insufficient  and  that  a  third  increase  was  necessary. 
Therefore,  another  amendment  to  the  law  was  obtained  in 
1902  which  offered  certain  privileges  to  the  teachers  who 
would  enroll  during  the  next  nine  months.  The  contributions 
of  all  teachers  who  would  become  members  after  January  i, 
1903,  and  who  would  then  have  more  than  10  years  of  serv- 
ice were  to  be  increased  to  2  per  cent.  A  great  membership 
campaign  was  organized  and  about  900  teachers  were  enrolled. 
Immediately  the  income  rose  about  $8,000  and  the  amount 
added  to  the  capital  about  $5,000.  As  the  disbursements  con- 
tinued steadily  to  increase  during  the  next  three  years,  the 
amounts  added  to  the  capital  fell  far  be.low  the  already  low 
mark  set  by  the  preceding  period : 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements3  (Excess  of  Income 

Over  Disbursements) 

1903  $28,400  $l6,900  $11,500 

1904  26,400  2O,OXX)  5,500 

1905  28,800  23,8OO  5.OOO 

1906  34,8OO  29,IOO  5,7OO 

The  operations  of  the  year  1905  resulted  in  a  still  smaller 
surplus,  and  those  of  1906  would  have  resulted  in  a  defi- 
ciency had  not  a  strenuous  effort  been  made  to  raise  funds 
by  means  of  entertainments  and  donations.  In  1905  almost 
$3,000  had  to  be  raised  and  in  1906  over  $10,000  (the  largest 
and  practically  the  last  collection  in  the  history  of  the  fund) 
in  order  to  cover  the  deficiency.  Again  the  fund  was  involved 
in  financial  difficulties  and  this  time  the  difficulties  were  greater 
than  before. 

To  relieve  the  situation  a  third  amendment  to  the  law  was 
prepared  and  its  passage  secured  in  1906,  which,  in  the  first 
place,  began  a  liquidation  of  the  old  i  per  cent  fund  and  estab- 
lished in  its  place  a  new  fund  with  higher  rates  of  contribu- 
tions,2 and  in  the  second  place  compelled  all  teachers  appointed 
in  the  future  (after  January,  1908)  to  enter  the  new  fund. 

Includes  administrative  expense:  $1,900  in  1903;  $1,600  in  1904,  and 
$1,500  the  following  two  years. 

'Those  with  less  than  10  years  of  teaching  experience  at  the  time  of 
becoming  a  member  were  made  to  contribute  2  per  cent,  of  their  salary, 
those  with  more  than  10  but  less  than  15  years,  2j4  per  cent.,  and  those 
with  more  than  15  years,  3  per  cent. 

185 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

During  the  first  two  years  the  results  were  very  disappointing 
as  the  majority  of  the  teachers  refused  the  higher  rates.  The 
receipts  increased  because  of  the  higher  contributions  of  those 
who  accepted  the  act,  but  not  sufficiently  to  overcome  the 
increase  in  the  disbursements.  As  a  result,  the  annual  surplus 
continued  to  fall,  as  shown  below: 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements1  (Excess  of  Income 

Over  Disbursements) 

1907  $39,600  $36,400  $3,20O 

I008  56,400  54,800  1, 600 

In  the  meanwhile  the  managers  secured  another  amend- 
ment (1907)  which  increased  the  annuity  to  60  per  cent  of 
salary,  offered  various  other  inducements  to  the  teachers  who 
would  accept  the  new  act,  and  postponed  closing  the  doors 
of  the  fund  for  another  year.  But  teachers  were  reluctant 
to  enter  it.  All  interest  in  the  fund  apparently  died  out. 
Then  during  the  last  four  months  of  1908,  the  managers 
launched  a  great  membership  campaign  throughout  the  entire 
state  and  succeeded  in  enrolling  almost  4,000  teachers.  The 
large  number  of  new  contributors  and  the  higher  rate  of  their 
contributions  increased  the  receipts  for  1909  and  1910,  re- 
spectively, to  double  and  triple  the  totals  for  1908,  and  gave 
the  fund  the  largest  annual  surplus  ever  obtained.  These  first 
two  years  of  operation  at  the  higher  rate  of  contributions 
have  almost  doubled  the  capital  accumulated  during  the  pre- 
ceding twelve  years : 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements  (Excess  of  Income 

Over  Disbursements) 

1909  $97,700  $64,600  $33,ioo 

1910  I52,IOO  87,IOO  65,OOO 

Had  the  fund  not  changed  from  a  voluntary  to  a  com- 
pulsory basis  and  increased  its  membership  by  the  great  cam- 
paign of  1908,  it  would  have  faced  another  annual  deficiency 
in  1909,  and  would  have  been  forced  to  draw  upon  its  reserve,, 
then  totaling  about  $95,000,  which  would  probably  have  been 

Includes  administrative  expense:  $600  in  1907  and  $1,500  in  1908. 

186 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

expended  in  five  or  six  years,  in  spite  of  the  annual  automatic 
increases  in  the  compulsory  membership  and  the  emergency 
collections  and  entertainments.  However,  with  the  contribu- 
tions obtained  from  the  younger  teachers  who  were  enrolled 
in  1908  and  also  from  the  new  appointees  who  were  compelled 
to  contribute,  the  fund  has  been  able  to  continue  making  pay- 
ments to  its  old  annuitants  and  to  grant  new  annuities  to  its 
old  members,  and,  furthermore,  to  increase  its  capital  almost 
400  per  cent. 

Meanwhile,  the  disbursements  are  continuing  steadily  to 
increase  at  a  more  rapid  pace  than  the  income.  Each  year  the 
unexpended  portion  of  income  added  to  the  capital  becomes 
smaller  and  smaller  as  shown  by  the  following  table: 

Year  Ending  Annual  Surplus 

June  30  Receipts  Disbursements  (Excess  of  Income 

Over  Disbursements) 

IQII  $174,800  $111,900  $62,900 

1912  192,600  135,700  56,90O 

1913  I96.9001          154,400  42,500 

1914  231, 9O01  183,700  48,200 

1915  235,400  207,200  28,70O 

1916  264,100  231,000  33.IOO 

1917  277,000  258,000  I9,OOO 

1918  276,800  276,100  700 

It  is  all  too  evident  that  soon  there  will  be  no  surplus,  the 
disbursements  will  again  exceed  the  receipts,  and  the  fund 
will  develop  an  annual  deficiency  unless  another  temporary 
relief  is  obtained  by  again  increasing  the  contributions,  or  a 
permanent  improvement  is  effected  by  providing  an  adequate 
income  actuarially  determined. 

The  fund  having  been  criticized  by  the  Carnegie  Foundation 
as  being  unsound,  the  State  Teachers'  Association  decided  on 
an  actuarial  investigation  and  offered  to  defray  the  expense  of 
it.  The  cooperation  of  the  retirement  board  was  secured  and 

*A  large  part  of  the  dues  (about  $15,000)  creditable  to  1913  had  not 
been  credited  when  the  state  treasurer's  books  closed  on  June  30,  1913, 
and  were  subsequently  credited  to  the  year  1914.  The  receipts  and  surplus 
shown  here  for  the  year  1913,  as  somewhat  lower  than  those  of  1914,  were 
therefore  in  reality  higher.  An  adjustment  of  these  figures  would  have 
shown  a  more  gradual  decline  in  the  annual  surplus. 

I87 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

an  actuary  was  engaged.1  His  report,  submitted  in  November, 
1917,  showed  that  the  liabilities  of  the  fund  on  account  of 
annuities  now  outstanding  amount  to  $2,324,651.77.  Its  total 
present  assets  are  only  about  $485,000.  The  fund  is,  therefore, 
insolvent  even  on  account  of  those  liabilities  alone.  But 
this  is  only  a  relatively  small  portion  of  the  total  liabilities  of 
the  fund ;  by  far  larger  are  the  liabilities  on  account  of  all  the 
members  now  in  active  service  and  who  have  been  for  years 
contributing  to  the  fund.  The  total  liabilities  amount  to  many 
millions  of  dollars,  and  the  total  assets,  according  to  all  indica- 
tions, are  insufficient  to  offset  them.  This  means  that  the  great 
majority  of  teachers  are  still  contributing  for  the  benefit  of 
others.  It  should  be  added  that  besides  the  thousands  of 
teachers  whose  interests  are  thus  sacrificed  as  a  result  of  the  ap- 
parent insolvency  of  the  fund,  there  are  a  number  of  others 
whose  interests  would  be  sacrificed  even  if  the  fund  were  solv- 
ent, namely,  all  who  withdraw  from  the  service  before  retire- 
ment whether  through  resignation,  dismissal  or  death.  Under 
the  law  governing  the  fund,  they  forfeit  all  their  contributions 
and  are  thus  penalized  for  the  benefit  of  those  who  stay  in  the 
service. 

In  December,  1918,  the  Bureau  of  State  Research  of  the  New 
Jersey  State  Chamber  of  Commerce  issued  a  report2  present- 
ing the  entire  history  of  the  fund  and  analyzing  its  present 

Previous  to  this  investigation  the  fund  was  investigated  in  the  year  1913 
by  a  committee  elected  by  members  of  the  fund.  The  inherent  weakness 
of  the  fund  and  the  need  for  actuarial  methods  were  not  appreciated  by  the 
commissioners,  who  wrote :  "The  New  Jersey  law  is  the  result  of  years 
of  experiment  and  progressive  legislation.  The  present  law,  while  very 
comprehensive,  is  simple.  It  requires  no  actuarial  knowledge  to  determine 
the  amount  of  annuities;  it  has  none  of  the  insurance  intricacies  of  the 
Massachusetts  law.  The  questions  that  arise  are  not  actuarial  questions, 
but  questions  of  fact  and  the  trustees  are  entirely  competent  to  answer 
them."  It  optimistically  reported,  "Your  committee  rest  confident  in  the 
perpetuity  of  the  fund."  Report  of  special  investigating  committee 
authorized  at  the  annual  convention  of  county  delegates  elected  by  the 
members  of  the  New  Jersey  State  Teachers'  Retirement  Fund,  Sept.  27, 
1913,  submitted  Sept.  26,  1914,  p.  15  and  23. 

2Teachers'  Retirement  Systems  in  New  Jersey,  Their  Fallacies  and  Evo- 
lution. Prepared  by  Paul  Studensky.  State  Research,  Consecutive  Num- 
bers-, 10  and  12,  1918,  88  p. 

188 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

condition.  The  report  pointed  out  the  anomaly  of  double  bene- 
fits resulting  from  the  coexistence  of  the  retirement  fund 
and  the  state  pension.1  Nominally,  the  two  systems  serve 
different  purposes — the  retirement  fund  protects  the  teachers 
against  disability,  and  the  state  pension  against  old  age.  In 
reality,  however,  both  grant  superannuation  benefits.  Since 
1911  the  great  majority,  about  two-thirds,  of  those  who  are 
being  placed  on  the  annuity  list  of  the  retirement  fund  are  at 
the  same  time  pensioners  of  the  state  system.  Their  total  re- 
tirement benefits  are,  therefore,  abnormally  large  when  com- 
pared with  the  salaries  they  were  receiving  while  in  active  serv- 
ice. For  those  whose  salaries  are  less  than  $1,300,  i.  e.  for  the 
majority  of  those  retiring  on  double  benefits,  the  benefits  are 
larger  than  the  salaries,  as  may  be  seen  from  the  following 
table : 

10  teachers  enjoying  benefits  of    70%  to    75%  of  salary 

78  teachers  enjoying  benefits  of    75%  to  100%  of  salary 

86  teachers  enjoying  benefits  of  100%  to  110%  of  salary 

189  teachers  enjoying  benefits  of  110%  of  salary,  and  more 

363  teachers  enjoying  benefits  averaging  103%  of  salary 

There  is  obviously  no  justification  for  paying  a  teacher  after 
retirement  more  than  she  earned  while  in  service.  Moreover, 
the  effect  upon  the  efficiency  of  the  schools  may  prove  very 
prejudicial,  as  there  is  a  strong  incentive  for  quitting  the  serv- 
ice as  soon  as  the  minimum  requirements  for  retirement  are 
met. 

The  report  of  the  bureau  of  state  research  shows  con- 
clusively that  no  further  makeshifts  in  financing  either  the 
fund  or  the  state  pension  can  improve  the  situation,  and  that 
a  reorganization  on  an  actuarial  basis  is  urgently  needed.  This 
raises  the  question  whether  this  reorganization  should  be 
effected  separately  for  each  system,  or  whether  the  systems 
should  be  consolidated  into  one.  A  separate  reorganization 
would  involve  for  the  teachers  the  necessity  of  carrying  all 

'The  New  Jersey  State  Pension  System  was  discussed  in  the  preceding 
chapter. 

189 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  burden  of  the  future  liabilities  of  the  fund  and  supplying 
the  many  millions  needed  to  cover  its  past  deficiencies ;  on  the 
other  hand,  it  would  necessitate  the  appropriation  by  the  state 
of  perhaps  as  much  as  a  million  dollars  annually  for  the 
support  of  the  state  pension  system  on  a  reserve  basis,  and 
the  duplication  of  benefits  would  continue.  If,  on  the  con- 
trary, a  single  system  were  established  and  supported  by 
joint  contribution,  the  burden  upon  either  party  might  be 
considerably  less  and  the  system  could  "meet  the  economic 
needs  of  every  member  of  the  system,  effectively  relieve  the 
schools  of  the  superannuated  and  disabled,  insure  the  efficiency 
of  the  teaching  staff,  and  benefit  the  public  at  large." 

After  an  exhaustive  actuarial  investigation  which  showed 
that  the  retirement  fund  had  a  deficiency  of  about  $15,000,000 
(liabilities  of  $19,000,000  against  assets  of  $4,000,000)  the 
pension  and  retirement  fund  commission,  which,  as  already 
stated,  was  appointed  by  the  legislature  of  1917  to  investigate 
all  the  pension  funds  in  New  Jersey,  became  thoroughly  con- 
vinced that  the  teachers  could  not  by  their  own  contributions 
make  the  fund  solvent  and  that  the  situation  could  be  effec- 
tively remedied  only  by  a  merger  of  the  two  systems.  It,  there- 
fore, undertook  to  frame  a  bill  providing  for  the  establishment 
of  a  new  retirement  plan  jointly  supported  and  administered  by 
the  teachers  and  by  the  state  and  founded  on  an  actuarial  re- 
serve basis.1 

Minnesota  Teachers'  Insurance  and  Retirement  Fund. 
The  state-wide  system  of  Minnesota  is  one  of  the  most  recent 
systems  in  this  country,  the  law  for  its  establishment  being 
enacted  April  20,  191 5-2 

The  system  applies  to  all  public  school  teachers  in  Minne- 
sota, outside  of  Minneapolis,  St.  Paul  and  Duluth,  where 
separate  systems  exist.  Teachers  who  enter  the  service  after 
July  i,  1915  automatically  become  members  of  the  fund, 
whereas  those  already  in  the  service  are  given  until  September 

'The  bill  became  a  law  on  April  10,  1919.     For  the  description  of  the 
new  retirement  plan  see  Chapter  XVIII. 
zMinnesota,  Acts,  1915,  ch.  199,  Apr.  20. 

190 


SYSTEMS  WITH   INADEQUATE  RESERVES:   STATE 

i,  1917  to  join  it.  It  is  managed  by  a  board  of  trustees  which 
consists  of  the  state  superintendent  of  education,  the  state 
auditor,  the  attorney  general  and  two  members  of  the  fund 
association. 

The  revenues  of  the  fund  consist  of  annual  contributions 
by  the  state  and  by  the  teachers.  The  state  contributes  one- 
twentieth  of  a  mill  tax  on  all  the  taxable  property  in  the  state, 
excluding  Minneapolis,  St.  Paul  and  Duluth.  This  source 
will  yield,  during  the  first  few  years,  about  $60,000  annually.1 

The  teachers  are  divided  into  two  classes :  Those  receiving 
salaries  under  $1,500  contribute  $5  annually  during  the  first 
five  years,  $10  the  second  five  years,  $20  the  next  ten  years 
and  $30  the  last  five  years;  whereas,  those  with  salaries  over 
$1,500  contribute  during  the  first  ten  years  1^2  per  cent  of 
salary  (max.  $20),  and  during  the  last  fifteen  years  2  per 
cent  (max.  $40).  No  contributions  are  required  after  twenty- 
five  years. 

Thirty  years  of  service,  fifteen  of  which  must  have  been 
served  in  the  state,  entitle  a  teacher  to  a  pension  of  $350. 
This  pension  increases  by  $30  for  each  additional  year  of 
service  up  to  a  maximum  of  $500.  At  disability  after  fifteen 
years  proportionate  pensions  are  paid,  and  upon  death  one- 
half  of  the  member's  contributions  is  refunded  to  his  depend- 
ents, if  no  annuity  has  been  drawn. 

A  member  is  allowed  credit  for  services  rendered-  prior 
to  the  enactment  of  the  law  provided  he  has  paid  arrearages 
at  the  above  rate.  In  case  a  member  retires  before  he  has 
paid  in  the  full  amount  of  back  assessments  his  annuity  is 
credited  until  the  required  amount  is  made  up. 

The  provision  of  the  Minnesota  system  granting  pensions 
after  20  years  of  service,  regardless  of  age,  is  almost  unique 
in  its  liberality.  It  would  never  have  been  introduced  had 

JDuring  the  year  ending  June  30,  1917,  the  fund  received  $80,700  in 
back  assessments  from  teachers,  $27,500  in  assessments  from  new  entrants, 
and  $57,000  from  taxes.  The  disbursements  on  annuities  aggregated 
$49,300. 

191 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

its  real  cost  been  ascertained.  It  allows  retirement  at  as  early 
an  age  as  40,  although  the  life  expectancy  and  the  cost  of 
retirement  benefits  at  that  age  are  considerable.  However, 
this  provision  is  not  of  primary  importance.  It  merely  shows 
how  far  the  founders  of  a  system  may  err  when  they  do  not 
know  the  cost  of  retirement  benefits.  The  system  would  be 
financially  unsound  even  if  the  retirement  condition  was 
increased  to  thirty  or  thirty-five  years,  for  its  contributions  and 
benefits  are  not  based  upon  mortality  rates  and  interest  tables, 
and  it  does  not  operate  on  a  reserve  basis. 

A  preliminary  survey  of  the  Minnesota  fund  was  made 
soon  after  its  establishment,  at  the  request  of  the  board  of 
trustees,  by  Mr.  E.  S.  Cogswell,  former  secretary  of  the 
Massachusetts  Teachers'  Retirement  Fund.  Asked  as  to  his 
conclusions  concerning  the  financial  condition  of  the  fund, 
he  replied  with  the  following  statement: 

As  the  time  for  joining  the  Fund  Association  for  the 
teachers  in  service  at  the  time  the  act  was  passed  does  not 
expire  until  September,  1917,  it  is  impossible  to  make  a  com- 
plete report  upon  the  affairs  of  the  Fund  before  another  year 
has  elapsed.  I  am  convinced,  however,  that  even  under  very 
favorable  circumstances  the  Fund  as  at  present  constituted  by 
law,  cannot  pay  in  the  long  run  more  than  40%  of  the  annuities 
mentioned  in  the  act.  Since  the  investigation  was  made,  the 
board  of  trustees  voted  to  pay  only  80%  of  the  annuities  due 
October  i,  1916,  as  the  law  provides  that  the  annuities  may  be 
prorated  if  the  trustees  believe  the  condition  of  the  Fund 
requires  it. 

Of  course,  as  in  the  case  of  other  pension  funds  just  start- 
ing, the  current  income  is  considerably  in  excess  of  current 
disbursements,  but  it  will  be  only  a  few  years  before  the 
disbursements  will  exceed  the  income  unless  the  annuities  are 
still  further  reduced. 

The  management  of  this  Fund  is  efficient  and  progressive, 
and  will  at  the  proper  time  recommend  to  the  legislature 
changes  in  the  law  so  that  the  Fund  may  be  placed  upon  a 
more  solid  financial  basis. 

192 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

Wisconsin   Teachers'    Insurance   and   Retirement   Fund. 

This  system  was  established  on  June  12,  191 1,1  at  about  the 
same  time  as  the  New  York  state  system.  It  applied  to  all 
public  school  teachers  in  the  state  outside  of  Milwaukee,  where 
a  separate  system  exists,  and  it  made  membership  compulsory 
for  all  teachers  entering  the  service  after  September  I,  1911. 

Teachers  already  in  the  service  were  given  until  September 
I,  1912,  to  decide  whether  or  not  they  would  join  the  fund. 
It  is  interesting  to  note  that  out  of  9,168  teachers,  for  whom 
the  law  was  elective,  only  2,168  made  application  before  Sep- 
tember i,  1912,  whereas  as  many  as  7,000,  more  than  three- 
fourths  of  the  total  number,  which  represented  the  bulk  of  the 
younger  teachers,  did  not  elect  to  come  under  the  law. 

The  number  of  contributors  to  the  fund  increased  rapidly 
during  the  next  five  years.  On  September  i,  1917,  out  of  a 
total  of  15,500  teachers  outside  of  Milwaukee,  as  many  as 
12,100  belonged  to  the  fund,  whereas  only  3,400  remained 
outside.  Out  of  the  latter  number  10,060  contributed  i  per 
cent  of  their  salary,  and  1,390,  2  per  cent. 

The  teachers  contribute  i  per  cent  of  salary  the  first  ten 
years  (max.  $15)  and  2  per  cent  for  next  fifteen  years  (max. 
$30).  The  total  of  twenty-five  contributions  must  not  fall 
below  the  amount  of  the  first  year's  pension  nor  exceed  $600, 

The  state  contributes  to  the  fund  from  certain  school  taxesr 
ten  cents  for  each  person  of  school  age. 

These  revenues  can  provide  for  only  a  small  part  of  the 
real  cost  of  the  benefits,  which  are  fixed  by  the  law  as  follows : 
A  pension  of  $12.50  for  each  year  of  service  on  retirement 
after  twenty-five  years  (of  which  eighteen  must  have  been  in 
the  state),  or  upon  disability  after  eighteen  years,  and  a  refund 
of  one-half  of  the  member's  contribution  without  interest. 

This  Wisconsin  state-wide  system  is  more  or  less  similar 
to  the  Milwaukee  system,  which  was  established  by  a  state 
law  in  1907,  and  amended  in  1909  and  1911.  The  fate  of  the 
Milwaukee  system  is,  therefore,  of  special  significance.  After 

1  Wisconsin,  Acts,  1911,  ch.  323,  June  12. 

193 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

a  few  years  of  apparent  prosperity,  when  the  fund  had  accum- 
ulated a  reserve  of  about  $100,000,  the  disbursements  absorbed 
the  revenues,  and  the  board  was  forced  to  reduce  the  benefits 
from  $400  to  $300.*  An  amendment  of  the  law  was  enacted2 
which  restricted  the  retirements  by  increasing  the  service 
requirements  to  35  years,  except  for  persons  over  65  years  of 
age,  in  whose  case  only  25  years  of  service  are  required.  It 
will  undoubtedly  be  necessary  soon  to  introduce  a  similar  re- 
striction in  the  Wisconsin  system,  because  the  25-year  service 
requirement  permits  retirement  at  a  very  low  age  and  thus 
results  not  only  in  an  undue  financial  burden  on  the  system, 
but  in  the  premature  loss  of  efficient  teachers.  That  the 
teachers  are  availing  themselves  of  the  low  requirements  of 
the  system  may  be  seen  from  the  fact  that  the  average  age  of 
229  women,  who  have  retired  since  the  law  went  into  effect, 
was  only  52.7,  and  the  average  age  of  the  44  men  was  55.8 
years.  This  indicates  that  a  considerable  number  of  persons 
are  retiring  before  50  years  of  age.  The  average  annuity  of 
the  women  was  $358.91  and  of  the  men  $365.98.  The  cost 
of  these  annuities  at  these  early  ages  is  considerable.  Accord- 
ing to  the  mortality  experience  obtained  among  the  New  York 
City  teachers,  a  woman  teacher  retired  at  53  years  of  age 
would  live  and  draw  her  annuity  for  about  21.07  years.  The 
cost  of  the  average  annuity  of  $358.91  at  that  age  amounts 
to  $4,791.45.  The  273  annuitants  have  paid  into  the  fund 
a  total  of  about  $91,000,  yet  they  will  receive  benefits  the 
value  of  which  exceeds  $1,000,000,  or  about  eleven  times  the 
amount  they  have  paid  in. 

How  long  will  the  fund  be  able  to  pay  the  tremendous  excess 
over  and  above  the  amount  which  it  has  received  from  the 
annuitants?  During  the  first  six  years  the  fund  accumulated 
a  balance  of  about  $500,000  which  created  an  impression  of 
apparent  prosperity  and  financial  security.  Yet  in  reality  this 
balance  is  insufficient  even  as  a  reserve  against  the  liabilities 

1Milwaukee  Sentinel,  Feb.  17,  1916. 
2Wisconsin,  Acts,  1917,  ch.  225. 

194 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

under  the  existing  annuity  roll,  let  alone  the  reserve  necessary 
to  assure  the  future  payments  of  benefits  to  present  active 
members.  The  annuity  roll  has  already  increased  from 
$11,193  m  I9I3  to  $72>734  m  I9I5»  and  to  almost  $90,000  in 
1917.  In  a  few  years  the  disbursements  will  catch  up  with 
and  exceed  the  revenues,  consisting  of  a  state  contribution 
which  is  almost  stationary  and  amounts  to  only  about  $65,000, 
and  of  a  teachers'  contribution  which  amounted  to  about 
$82,700  in  1917  (outside  of  $16,000  paid  in  arrears)  and 
which  will  not  increase  as  rapidly  as  the  pension  roll.  The 
fund  will  then  draw  upon  the  reserve  which  it  has  accumu- 
lated during  the  earlier  years  and  will  expend  it  in  a  com- 
paratively much  shorter  space  of  time.  It  will  then  be  unable 
to  pay  the  same  rate  of  benefits  and  to  grant  new  retirements. 
Only  a  reorganization  of  the  system  on  an  adequate  basis 
can  save  it  from  disaster.  The  system  is  being  investigated 
by  the  actuary  of  the  Wisconsin  State  Insurance  Commis- 
sion and  its  weakness  will  undoubtedly  be  realized. 

California  Teachers'  Retirement  Salary  Fund.  The  law 
establishing  this  fund  became  effective  in  August,  1913,  at 
about  the  same  time  as  the  law  establishing  the  state  board  of 
education.  The  fund  was  put  into  operation  on  January  i, 
1914,  after  the  state  board  had  been  organized.  Membership 
was  made  compulsory  for  all  new  entrants,  teachers  already 
in  the  service  being  given  until  the  beginning  of  1914  to 
exercise  this  option. 

A  pension  of  $500  is  provided  after  30  years  of  service,  15 
of  which  must  have  been  passed  in  the  state.  The  teachers 
contribute  at  the  rate  of  $i  per  month  and  total  contributions 
at  date  of  retirement  must  equal  at  least  $360.  The  state 
contributes  5  per  cent  of  the  inheritance  and  transfer  tax.1 

^he  proceeds  from  the  inheritance  tax  were  as  follows:  In  1913, 
$79,344;  1914,  $89,775;  1915,  $139,154;  1916,  $157,261-  The  total  annual 
receipts  of  the  fund  from  all  sources  amounted  to  $346,749  in  1916.  Of 
this  about  one-half  came  from  teachers'  contributions  and  the  other  half 
from  the  inheritance  tax  and  from  interest  on  investments.  The  disburse- 
ments that  year  amounted  to  $140,304,  the  surplus,  $206,445,  and  the  capital, 
$683,236. 

195 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

.  A  statement  of  the  retirement  board  says  that  "up  to  the 
present  time  the  income  from  the  inheritance  tax  has  been 
very  satisfactory,  but  owing  to  its  uncertain  character  may 
prove  disappointing  at  any  time,  and  the  administrators  of 
the  law  do  not  figure  returns  from  this  source  as  adequate 
for  the  prospective  demands  on  the  law."  Experience  has 
shown  that  the  use  of  miscellaneous  and  fluctuating  revenues 
has  a  bad  effect  upon  a  pension  fund.  In  all  probability  the 
combined  income  from  the  two  sources  will  soon  prove  utterly 
inadequate.  The  state,  according  to  the  law,  may  in  its  dis- 
cretion appropriate  an  additional  sum,  but  it  is  in  no  way 
obligated  to  do  so.  The  wisest  policy  no  doubt  would  be  to 
reorganize. 

That  this  is  appreciated  by  the  managers  of  the  fund  may 
be  seen  from  the  following  extract  from  the  report  of  the 
finance  committee  of  the  board.1 

The  present  annual  addition  to  the  teaching  force  of  the 
state  is  about  1 ,000,  and  the  average  annual  increase  in  revenue 
from  this  source,  therefore,  will  not  exceed  $10,000  (the  aver- 
age contribution  being  $10  per  year). 

On  the  other  hand  we  are  placing  on  the  retirement  roll 
over  130  teachers  annually.  In  the  last  fiscal  year  the  in- 
creased expenditure  on  this  account  over  the  year  previous 
was  $54,619.62.  To  offset  this  annual  increase  we  can  only 
anticipate  an  increased  revenue  from  teachers'  payments  of 
$10,000.  This  conclusively  disproves  the  impression,  which 
somehow  has  gained  circulation  among  teachers,  that  their 
contributions  alone  are  providing  enough  funds  to  support 
the  retirement  salary  demands.  As  a  matter  of  fact,  if  the 
present  rate  of  retirements  persists,  we  will,  in  four  years,  be 
disbursing  our  entire  income  from  all  sources,  and  it  will  be 
necessary  thereafter  to  draw  upon  our  surplus.  It  is  esti- 
mated by  the  State  Board  of  Control  that  by  the  seventy- 
sixth  fiscal  year  we  will  be  facing  a  serious  deficit,  unless  some 
changes  are  made  in  the  conditions  under  which  salaries  are 
now  granted,  or  revenues  provided. 

A  study  of  the  histories  of  teachers  now  under  retirement 

Biennial  Report,  State  Bd.  Ed.,  1914-16,  p.  76. 

196 


SYSTEMS  WITH  INADEQUATE  RESERVES:   STATE 

salary  shows  an  average  age  at  retirement  of  60  (plus)  years. 
Mortality  statistics  give  12  years  as  the  life  expectancy  at  60 
years  of  age.  For  each  teacher  who  takes  advantage  of  the 
law  at  present  the  state  assumes  a  liability  of  $500  per  year 
for  12  years,  or  $6,000.  Towards  this  sum  the  retiring  teacher 
during  her  30  years  of  service  contributes  $360.  It  is  fre- 
quently asserted  that  this  discrepancy  is  in  a  large  measure 
made  good  by  payments  of  teachers  who  leave  the  service 
without  qualifying  for  the  retirement  salary,  thereby  forfeit- 
ing to  the  state  the  money  they  have  paid  in  under  the  law.  An 
average  teacher  stays  in  the  profession  about  three  years,  and 
therefore  during  her  teaching  period  contributes  about  $30 
to  the  retirement  fund.  It  would  take  contributions  from  118 
of  these  short  term  teachers  to  make  up  the  sum  necessary  to 
pay  for  one  teacher  who  remains  to  retire  on  full  salary. 
Obviously,  therefore,  lapsed  teachers'  payments  will  have  little 
effect  on  the  larger  problem  of  retirement  salary  support. 

In  bringing  these  matters  to  public  attention  it  is  not  the 
object  of  the  committee  to  sound  any  unnecessary  alarm,  but 
only  to  make  clear  the  fact  that  sooner  or  later  steps  will  have 
to  be  taken  looking  to  a  more  sound  financial  basis  for  the 
public  school  teachers'  retirement  salary  fund  law  than  exists 
at  present.  The  law  is  in  the  same  category  with  an  ore  pocket 
in  a  gold  mine ;  it  is  rich  enough  on  the  surface,  but  is  certain 
to  run  out  in  the  future.  It  is  only  proper  that  we  should  begin 
to  take  some  stock  for  the  morrow. 

Recognizing  the  great  benefit  to  California  schools  and 
school  teachers  of  the  operation  of  the  public  school  teachers' 
retirement  salary  fund  law,  the  necessity  for  an  absolutely 
sound  financial  basis  becomes  a  matter  of  vital  consideration 
in  the  administration  of  the  law.  If  this  splendid  progressive 
educational  institution  is  to  be  perpetuated,  it  must  be  safe- 
guarded while  its  administration  rests  in  the  hands  of  those 
committed  to  and  heartily  in  sympathy  with  the  principles 
upon  which  the  law  is  based.  It  is  not  safe  to  let  the  future 
financial  obligations  of  the  law  depend  either  in  whole  or  in 
part  upon  the  generosity  of  biennial  direct  legislative  appro- 
priations. Neither  is  it  right  or  just  to  contemplate  for  the 
state  a  future  financial  burden  out  of  proportion  to  the  benefits 
anticipated  from  the  operation  of  the  law. 

The-  public   school  teachers'    retirement   salary   fund   law 

197 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

is  based  upon  the  theory  that  the  schools  and  children  of  the 
state  will  be  benefited  by  the  retirement  of  teachers  who  have 
passed  the  age  of  real  efficiency,  by  providing  for  them  a 
salary  in  return  for  their  discontinuance  of  active  teaching. 
But  combined  with  this  utilitarian  aim  is  a  deep  sympathy  for 
the  men  and  women  of  California  who  have  given  the  best 
period  of  their  lives  to  the  instruction  of  the  young,  and  a 
desire  to  see  their  declining  years  made  comfortable  and  care- 
free by  a  stipend  sufficient  to  meet  the  common  necessities 
of  existence.  Thus  we  find  combined  here  in  this  law  a  mutual 
benefit  which  is  an  ideal  combination  of  utility  and  personal 
reward.  For  the  benefit  to  the  schools,  the  state  should  be 
willing  to  provide  generously  a  lasting  financial  stability — 
for  the  personal  benefits  to  accrue  to  the  aged  teachers  of  the 
state,  the  teaching  fraternity  should  be  willing  to  contribute 
a  just  portion  and  to  agree  to  such  modifications  and  limita- 
tions as  will  be  necessary  to  place  the  administration  of  the 
law  upon  a  firm  and  lasting  foundation,  so  that  nothing  will 
be  liable  to  arise  in  future  years  to  curtail  or  to  jeopardize  the 
rewards  and  benefits  which  teachers  spending  their  life  in  the 
profession  have  a  right  to  anticipate. 

The  board  proposes  several  things  "which  can  be  done  to 
make  the  law  less  burdensome  in  its  financial  administration 
without  working  any  appreciable  hardship;"  (i)  fix  the  age 
limit  of  retirement,  except  under  disability,  at  55  or  60  years; 
(2)  increase  the  years  of  service  in  California  from  15  to  20 
years;  (3)  increase  teachers'  payments  after  15  years  of  service 
from  $i  per  month  to  $2  per  month;  (4)  permit  no  retirement 
for  disability  under  20  or  25  years  of  service,  20  of  which 
has  been  in  California.  The  board  realizes  that  these  measures 
are  only  palliatives.  Before  an  adequate  financial  reorganiza- 
tion of  the  system  can  be  effected,  the  exact  financial  condition 
of  the  fund  must  be  determined  by  means  of  an  actuarial  valu- 
ation of  the  total  assets  which  the  fund  will  realize  on  account 
of  its  present  members  and  the  total  liabilities  towards  all 
prospective  pensioners  among  them. 

Virginia   Retired   Teachers'    Fund.     The   difficulties   with 
which  this  fund  has  had  to  contend  present  a  striking  illustra- 

198 


SYSTEMS  WITH   INADEQUATE  RESERVES:   STATE 

tion  of  the  results  of  pension  legislation  enacted  without  ob- 
servance of  actuarial  principles. 

The  law  of  1908,*  which  established  the  fund,  provided 
it  with  a  revenue  consisting  of  contributions  by  the  teachers 
amounting  to  i  per  cent  of  their  salaries  and  of  a  small  con- 
tribution by  the  state  amounting  to  about  $5,000  annually, 
and  fixed  the  benefits  as  follows :  A  pension  of  one-half  salary, 
with  a  maximum  of  $400  and  $500,  after  30  years  of  service 
in  the  state,  and  after  age  58,  if  a  man,  and  50,  if  a  woman; 
and  a  proportionately  reduced  pension  at  disability. 

The  law  is  retroactive  in  its  application,  for  it  provides 
half-pensions  for  those  teachers  who  had  retired  between 
the  years  1902-1908  prior  to  the  enactment  of  the  law.  This 
is  a  very  unusual  provision.2  It  has  been  held  unconstitutional 
in  several  states.3  However  small  the  total  of  these  half- 
pensions,  it  represents  an  additional  and  immediate  drain  on 
these  revenues,  and  the  framers  of  the  bill  should  have  known 
that  it  would  precipitate  a  disaster. 

The  state  superintendent  of  schools  makes  the  following 
comment  about  the  system : 

The  teachers  pension  fund  in  Virginia  came  as  a  result  of 
the  movement  started  by  a  very  earnest  body  of  teachers. 
The  law  had  been  prepared  and  presented  to  the  legislature 
before  our  department  was  consulted  about  it.  We  suggested, 
however,  that  the  only  hope  of  avoiding  a  ruling  against  the 
constitutionality  of  the  original  act  was  to  make  the  deduc- 
tion of  i  per  cent  a  matter  of  contract  with  the  teachers.  Our 
suggestion  was  adopted. 

Our  pension  law  illustrates  also  the  dangers  inherent  in  a 
good  deal  of  modern  school  legislation  which  is  designed  and 
put  through  by  enthusiastic,  well-meaning  teachers  or  laymen 

1Virginia,  Acts,  1908,  ch.  313,  March  14. 

2Maine,  in  1913,  followed  the  example  of  Virginia  and  provided  for 
the  grant  of  half-pensions  to  teachers  who  had  retired  before  the  enact- 
ment of  the  law. 

3In  the  state  of  New  York  the  court  has  ruled  that  the  board  has  no 
power  to  grant  a  pension  to  a  teacher  who  ceased  to  teach  before  the 
enactment  of  the  law.  Mahon  vs.  Board  of  Educ.,  171  N.  Y.,  263  (1902)  ; 
People  ex  rel.  Wooddy  vs.  Partridge,  172  N.  Y.,  305. 

199 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

without  consulting  those  who  have  practical  and  expert  know- 
ledge in  reference  to  school  administration  and  the  proper 
financing  of  new  school  enterprises.  The  teachers  strenuously 
opposed  the  retroactive  feature,  but  the  members  of  the  legis- 
lature insisted  upon  that. 

While  Illinois,  New  Jersey,  Wisconsin,  Michigan  and  many 
other  systems  require  that  the  total  of  all  contributions  of  a 
teacher  eligible  to  retirement  should  equal  at  least  the  amount 
of  the  first  year's  pension,  Virginia  requires  a  minimum  of 
only  30  per  cent.  If  the  provisions  in  the  several  states  men- 
tioned are  insufficient  to  make  a  fund  solvent,  how  can  Vir- 
ginia hope  to  escape? 

In  view  of  the  provisions  thus  calculated  to  supply  the  fund 
with  small  revenues  and  to  charge  it  with  large  expenditures, 
the  law  provided  that  in  the  event  of  insufficiency  of  fund 
the  board  might  prorate  the  benefits.  This  of  course  hap- 
pened at  an  early  date.  Two  years  after  the  plan  was  started 
the  pension  roll  reached  $41,000,  exceeding  the  revenues, 
which  amounted  to  only  $38,500.  Then  the  board  of  retire- 
ment prorated  the  benefits.1  No  other  system  either  in  this 
country  or  abroad  has  failed  so  soon  after  its  establishment. 
The  state  superintendent  says : 

Our  legislation  for  teachers'  pensions  has  been  further 
handicapped  by  reason  of  the  fact  that  the  teachers  are  divided 
on  the  primary  question  of  such  legislation;  namely,  whether 
there  should  be  a  pension  system.  Therefore,  the  member  of 
the  legislature  hears  from  some  of  his  constituents  the  expres- 
sion— 'Maintain  it  by  all  means,'  and  from  others — 'Abolish 
it  immediately.'  This  divided  sentiment  which  ^prevails 
among  our  teachers  is  the  real  reason  why  the  appropriations 
have  not  been  more  generous. 

Michigan  Teachers'  Retirement  Fund.  The  conditions 
under  which  this  fund  originated  were  unusual.  The  bill 
originally  provided  that  in  addition  to  the  contributions  which 

1Report  of  the  Carnegie  Foundation,  1912,  p.  26.  In  1916  there  were 
419  pensions  on  the  roll.  The  receipts  of  the  fund  consisted  of  $10,000 
from  the  state,  $41,000  from  teachers  and  $2,000  from  investments. 

2OO 


SYSTEMS  WITH  INADEQUATE  RESERVES:  STATE 

the  teachers  were  to  pay,  the  state  was  to  contribute  $6,000 
for  administrative  expense  and  was  also  to  cover  any  de- 
ficiency that  might  arise.  The  legislature,  however,  struck 
out  the  latter  two  provisions,  and  on  May  u,  191 51  passed 
the  bill  providing  for  a  revenue  from  teachers'  contributions 
only. 

The  teachers'  contributions  were  fixed  by  the  law  at  one- 
half  of  i  per  cent  of  salary  (max.  $5)  during  the  first  5  years, 
i  per  cent  (max.  $10)  during  the  next  ten  years  and  2  per  cent 
(max.  $20)  thereafter;  and  the  total  of  all  contributions 
must  equal  at  least  the  amount  of  the  first  year's  pension. 

These  contributions  will  be  insufficient  to  provide  the  bene- 
fits which  are  as  follows:  After  25  years  of  service  (15  in  the 
state)  or  at  disability  after  15  years,  a  pension  of  one-sixtieth 
of  salary  for  each  year  of  service  (min.  $300,  max.  $500)  and 
at  resignation  a  refund  of  one-half  of  the  member's  contribu- 
tions without  interest. 

In  the  event  of  insufficiency  of  the  fund  the  board  may 
increase  the  contributions  to  i,  2,  and  3  per  cent  respectively. 
Even  a  contribution  so  graded  would  equal  an  average  con- 
tribution of  less  than  2  per  cent  of  salary  throughout  the 
twenty-five  years  of  contributing,  since  the  higher  contribu- 
tion of  3  per  cent  would  accumulate  interest  during  a  short 
period  only. 

The  experience  of  almost  all  pension  funds  of  long  opera- 
tion tends  to  show  that  no  fund  can  be  secure  with  benefits 
as  generous  as  this  fund  allows  unless  it  has  a  revenue  several 
times  as  great.  It  is  evident,  therefore,  that  the  increase  of 
contributions  within  the  narrow  limits  allowed  by  the  Michi- 
gan law  will  be  insufficient  to  save  the  fund  from  depletion. 
The  board  of  retirement  may  then  have  to  prorate  pensions 
and  even  to  stop  granting  new  pensions  altogether  unless 
state  aid  is  invoked  and  the  system  is  reorganized.  The  first 
of  these  measures  is  specified  by  the  law,  the  second  measure 

Michigan,  Acts,  1915,  ch.  174. 

2O I 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

is  made  possible  by  the  provision  which  leaves  the  matter  of 
granting  or  refusing  of  pensions  entirely  in  the  discretion  of 
the  board. 

The  following  statement  made  by  one  of  the  officers  of  the 
fund  in  April,  1918,  shows  that  steps  looking  to  an  actuarial 
reorganization  of  the  fund  are  already  being  taken: 

A  few  changes  will  be  made  during  the  next  year.  I  believe 
that  the  Retirement  Fund  Board  agrees  with  me  in  believing 
that  certain  changes  as  to  bettering  its  finances  will  be  advis- 
able at  the  first  opportunity. 

The  Retirement  Fund  Board  has  already  placed  an  age 
limit  of  fifty-five  among  the  requirements  for  retirement. 
This  may  be  raised  to  sixty  at  the  next  meeting  of  the  Board. 
I  believe  there  will  be  an  effort  made  in  this  state  in  the  near 
future  to  have  the  state  assume  the  cost  of  the  administra- 
tion of  the  law  and  also  to  provide  state  aid  in  the  support 
of  the  law. 

In  my  opinion  a  sound  and  equitable  retirement  system  must 
have  an  age  limit  in  addition  to  a  service  requirement.  I 
believe  that  there  should  be  three  sources  of  income: 

1.  Teachers  contributions. 

2.  Contribution  of  a  like  amount  by  the  local  School 

Board. 

3.  Contribution  directly  from  the  state. 

I  believe  that  our  fund  should  be  placed  on  a  sound  actuarial 
basis  at  the  earliest  possible  date. 

During  the  present  school  year  we  have  collected  data  which 
gives  us  the  salary  and  experience  distribution  for  the  teachers 
of  the  state  and  during  the  following  school  year  we  shall 
procure  data  which  will  give  us  the  age  distribution  of  the 
teachers  of  the  state.  We  then  hope  to  be  in  shape  to  make 
such  investigations  of  our  fund  as  will  place  the  exact  facts 
in  the  matter  before  us. 


202 


CHAPTER    XIII 

SYSTEMS    WITH    INADEQUATE    RESERVES: 
LOCAL  SYSTEMS 

Philadelphia  Teachers'  Retirement  Fund.  The  income  of 
this  fund  is  derived  from  two  sources :  the  teachers  and  the 
city.  The  teachers  contribute  i  per  cent  from  their  salaries 
the  first  10  years  and  2  per  cent  thereafter  (max.  $50).  The 
city  contributes  an  amount  equal  to  that  contributed  by  the 
teachers  during  the  preceding  year,  provided  its  financial  con- 
ditions warrant.  In  no  case  may  it  contribute  less  than 
$50,000.  The  total  contribution  of  a  teacher  eligible  to  retire- 
ment must  equal  at  least  the  amount  of  twenty-five  contri- 
butions. If  it  falls  short  of  that  amount,  the  difference  must 
either  be  paid  by  the  teacher  or  it  is  deducted  from  the  pension. 

A  pension  of  one-half  salary,  minimum  $400  and  maximum 
$1,000,  is  provided  for  a  teacher  who  retires  after  60  years 
of  age  and  30  years  of  service.  Proportionate  pensions  are 
paid  at  disability  and  a  refund  of  the  members'  contributions 
is  provided  at  dismissal. 

The  fund  was  established  in  1907.  During  the  ten  years 
ending  December  31,  1916,  the  fund  accumulated  a  balance 
of  about  $820,000,  of  which  over  $385,000  was  accumulated 
during  the  first  four  years.  Although  the  income  from 
interest  increased  during  these  ten  years  from  about  $1,600 
to  $36,700,  and  the  city  subsidy  which  amounted  to  only 
$50,000  the  first  six  years  was  increased  the  seventh  year  to 
$60,000,  next  year  to  $70,000  and  for  the  last  two  years 
amounted  to  $80,000,  and  the  income  from  arrears  has  in- 
creased to  about  $20,000  annually,  the  process  of  accumula- 

203 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

tion  has  been  gradually  slowing  down.  In  1907,  $107,000 
and  in  1908  more  than  $101,000  were  set  aside  from  the 
income  and  invested,  whereas  during  the  last  two  years  only 
about  $72,000  annually  had  been  added  to  the  invested  capital 
of  the  fund. 

The  main  cause  of  this  decrease  in  the  rate  of  accumulating 
a  reserve  was  the  rapid  growing  of  disbursements  on  account 
of  annual  additions  of  new  pensions.  During  1907  fifty  pen- 
sions were  granted  and  two  were  terminated  during  the  same 
year  on  account  of  death.  During  the  next  seven  years  as 
many  as  340  pensions  were  added  to  the  original  number 
and  only  fifty-two  were  terminated  on  account  of  deaths  and 
fourteen  from  other  causes.  The  number  of  pensions,  there- 
fore, increased  from  48  in  1907  to  371  in  1916. 

As  a  result  of  this  increase  the  disbursements  each  year 
required  a  greater  proportion  of  the  annual  income  as  shown 
in  the  following  chart : 

Percentage  of  Income  Percentage  of 

Year  Expended  on  Pensions  Income  set  Aside 

1907  8.5  9I.S 

1909  35-5  64.5 

1911  51.6  48.4 

1913  58.7  41-3 

1915  63.6  36.4 

1916  69.4  30.6 

The  disbursements  will  continue  to  increase  more  rapidly 
than  the  receipts,  because  the  number  of  new  retirements 
added  each  year  to  those  already  granted  will  not  be  counter- 
balanced by  terminations.  It  takes  a  retirement  fund  about 
sixty  years  to  strike  this  balance.  The  Philadelphia  fund  in 
its  present  form,  however,  cannot  survive  sixty  years,  for  its 
income  is  inadequate  and  the  fund  will  soon  be  depleted. 

It  will  take  but  a  few  years  for  the  growing  disbursements 
to  catch  up  with  and  exceed  the  income.  After  the  fund 
has  reached  the  crisis,  it  will  rapidly  expend  the  reserve 
accumulated  during  earlier  years  and  will  be  unable  to  pay 
full  benefits  and  grant  new  retirements.  This  danger  was 
realized  by  the  retirement  board  as  evidenced  by  a  recent 

204 


SYSTEMS  WITH  INADEQUATE  RESERVES:  LOCAL 

report  in  which  the  board  says  that  while  the  fund  will  be 
able  to  meet  its  future  liabilities  for  some  years  to  come,  its 
more  remote  future  is  not  reassuring.  "The  Retirement 
Board  has  undertaken  an  appraisement  of  the  fund,  employ- 
ing for  the  purpose  competent  actuarial  service."  The 
thought  that  guided  the  board  in  taking  this  action  is  stated  in 
the  following  words  i1 

In  reports  for  preceding  years  the  apparently  rapid  accumu- 
lation of  the  reserve  fund  has  been  cited  as  seeming  to  indicate 
the  stability  of  the  fund,  and,  while  attention  was  directed 
to  the  consideration  that  'a  score  or  more  years  must  elapse 
before  what  will  constitute  normal  demands  upon  the  fund 
may  be  very  definitely  ascertained,'  the  opinion  was  ventured 
that  it  would  be  able  to  meet  its  future  obligations.  There 
is  no  question  but  that  it  can  do  so  for  some  years  to  come. 
Recent  developments,  however,  in  connection  with  other  sys- 
tems analogous  to  our  own  and  whose  experience,  therefore, 
furnishes  us  with  some  indication  of  the  probable  course  that 
funds  so  constituted  must  take  as  the  years  go  on  are  not 
reassuring  for  the  more  remote  future. 

The  financial  and  other  weaknesses  which  have  developed 
in  a  number  of  state  and  city  funds  and  in  some  systems 
under  other  than  public  auspices  have  greatly  stimulated  study 
of  the  whole  question  and  it  has  been  discovered  that  a  large 
number  of  the  existing  pension  systems  of  the  country  are  not 
upon  a  basis  recognized  as  sound  when  assets  and  liabilities 
are  computed  in  accordance  with  accepted  actuarial  principles ; 
and,  apart  from  the  question  of  solvency,  that  many  systems 
are  not  organized  so  as  to  promote  most  effectively  the  ends 
for  which  they  are  designed. 

The  findings  of  this  report  and  the  results  of  other  studies 
that  are  now  available  clearly  indicate  that  the  question  of  the 
solvency  of  any  fund  should  not  be  permitted  to  rest  upon 
estimates  which  the  future  may  prove  to  be  wide  of  the  mark, 
but  should  be  ascertained  by  exact  actuarial  appraisement  of 
its  assets  and  liabilities.  It  is  a  satisfying  assurance  when 
such  an  appraisement  results  in  the  verdict  that  a  fund  is 
solvent  and  that  its  present  and  anticipated  resources  are  such 
that  it  may  be  expected  also  to  continue  so.  It  is,  of  course, 

aAnnual  Report  of  the  Philadelphia  Retirement  Board,  1916,  p.  22,  23. 

205 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

far  from  satisfactory,  but  even  more  important  that  the  fact 
be  ascertained,  if  the  verdict  be  that  the  fund  is  heading 
toward  disaster.  There  are  possibilities  of  distress  attendant 
upon  the  collapse  of  a  retirement  fund  that  one  cannot  con- 
template with  equanimity,  and  for  this  and  other  reasons  a 
system  found  to  possess  elements  of  weakness  should  be 
revised  in  whatever  direction  and  to  whatever  extent  may  be 
necessary  in  order  to  place  it  upon  an  unquestionably  sound 
basis. 

Asked  as  to  the  changes  in  the  system,  which  he  would 
believe  advisable,  one  of  the  officers  of  the  fund  said: 

In  accordance  with  the  probable  findings  of  the  actuarial 
report,  it  will  be  necessary  either  to  scale  down  the  benefits, 
increase  the  contributions  or  make  revisions  of  the  system  in 
both  directions  in  order  to  place  it  upon  a  sound  financial  basis. 

A  revision  of  the  system  in  my  judgment  should  include  the 
following : 

(a)  Elimination  of  the  'service'  provision  of  superannua- 
tion  retirement,    i.    e.,   have   the   superannuation   retirement 
determined  by  age  only,  the  years  of  service  factoring  merely 
as  determining  the  amount  of  the  retiring  allowance. 

(b)  Possibly  an  advance  of  the  superannuation  age  beyond 
the  present  requirement,  age  60. 

(c)  Provision  for  a  minimum  disability  benefit. 

(d)  The  establishment  of  a  greater  difference  between  the 
disability  benefits  and  the  superannuation  benefit  than  is  now 
provided  in  the  system. 

(e)  Provision   for  a  refund  benefit.     Under  the  present 
regulations  the  contributions  of  those  who  separate  from  the 
service  (except  in  the  case  of  those  dismissed  for  cause)  are 
forfeited.    There  has  been  little  objection  raised  to  this  partly 
because  the  rate  of  contribution  is  not  large.     If  the  system 
were  on  a  sound  financial  basis  rates  of  contribution  would 
be  much  larger  and  the  amount  forfeited  would  therefore  be 
more  considerable. 

(f)  More  definite  provision  as  to  the  amount  of  contribu- 
tion to  be  made  by  the  Board  of  Education. 

(g)  The  system  should  be  established  on  a  reserve  basis 
instead  of  on  the  present  cash  disbursement  basis. 

In  November,  1918,  a  report  was  submitted  to  the  retirement 

206 


SYSTEMS  WITH  INADEQUATE  RESERVES:  LOCAL 

board  by  the  actuary,  which  showed  that  the  fund  had  a  de- 
ficiency of  approximately  $9,000,000  (liabilities  of  $13,000,000 
against  assets  of  $4,000,000)  and  "will  ultimately  not  be  able 
to  pay  more  than  31  cents  to  annuitants  for  every  dollar  ex- 
pected." The  report  showed  that  it  would  be  to  the  best  ad- 
vantage of  the  teachers  and  of  the  city  if  they  merged  their 
fund  with  the  newly  created  state  fund. 

Cleveland  Teachers'  Pension  Fund.  Cleveland  is  one  of 
the  twenty  cities  in  Ohio  which  has  availed  itself  of  the  state 
law,  1896-1911,  which  enabled  any  city  to  establish  a  pen- 
sion fund  provided  one-third  of  its  teachers  approved  it. 
When  in  1906  the  proposal  was  made  in  Cleveland  to  estab- 
lish a  pension  fund,  797  teachers  voted  for  and  713  against. 
Since  the  number  of  votes  in  favor  of  the  creation  of  the  fund 
was  more  than  what  the  law  required,  the  system  became 
operative  in  spite  of  the  large  opposition.  The  teachers 
already  in  the  service  at  the  time  of  establishment  of  the  fund 
were  given  an  option  to  join  or  not  to  join.  For  all  new 
entrants  into  the  teaching  force  membership  was  made  com- 
pulsory. 

The  board  of  trustees  is  composed  of  six  members;  two 
members  elected  by  the  board  of  education  and  four  elected 
by  the  members  of  the  fund.1  Support  is  derived  from  two 
sources — the  teachers  and  the  city.  The  teachers  contribute 
$2  per  month,  and  must  pay  a  total  of  $20  for  each  year  of 
service  for  which  they  claim  credit,  up  to  the  amount  of  $600. 
In  case  a  retiring  teacher  has  not  paid  this  amount,  his  pension 
is  reduced  20  per  cent  until  the  required  amount  has  been 
contributed.  The  city  pays  into  the  fund  not  less  than  i  per 
cent  or  more  than  2  per  cent  of  the  gross  receipts  of  taxation 
raised  for  school  purposes. 

A  teacher  may  retire  after  30  years  of  service,  one-half  of 
which  period  must  have  been  served  in  the  schools  of  Cuya- 
hoga  County,  and  is  entitled  to  a  pension  of  $12.50  multiplied 

Cleveland  Teachers'  Pension  Fund,  Rules  and  Regulations,  1914.    16  p. 

207 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

by  the  number  of  years  of  service,  up  to  a  maximum  of  $450. 
In  case  a  teacher  is  disabled  after  20  years  of  service,  one-half 
of  that  time  having  been  served  in  Cuyahoga  County,  he  is 
entitled  to  a  pension  at  the  above  stated  rate.  In  the  event  of 
resignation  or  dismissal,  the  teacher  or  his  dependents  are 
entitled  to  a  refund  of  one-half  of  his  contributions  without 
interest.  In  the  event  of  dismissal  before  20  years  of  serv- 
ice, the  teacher  is  entitled  to  a  return  of  all  his  contributions. 
In  the  event  of  dismissal  after  20  years  of  service,  the  teacher 
is  entitled  to  a  pension  for  the  given  years  of  service. 

The  financial  effect  of  the  provision  allowing  credit  for 
outside  services  is  discussed  in  W.  A.  Jessup's  report  on  "The 
Teaching  Staff  of  Qeveland,"  which  is  a  part  of  the  education 
survey  conducted  by  the  Cleveland  Foundation  in  1915.  Mr. 
Jessup  writes: 

There  is  another  reason  why  the  school  system  should  exer- 
cise great  care  in  bringing  into  the  force  teachers  who  are  no 
longer  young.  This  is  the  serious  effect  which  the  employ- 
ment of  such  teachers  will  have  on  the  future  of  the  pension 
fund.  Figures  for  10  recent  appointments  of  teachers  from 
outside  of  Cleveland  show  that  their  average  is  43  and  that 
they  have  had  an  average  teaching  experience  of  16  years. 
With  respect  to  the  future  of  the  pension  fund,  there  is  a 
great  difference  between  the  employment  of  such  a  teacher 
and  bringing  into  the  force  a  teacher  who  has  recently  gradu- 
ated from  a  normal  school  and  had  a  year  or  two  of  teaching 
experience. 

Some  idea  of  the  quantities  involved  may  be  gained  from 
a  study  of  the  actuarial  tables  presented  in  the  report  of  the 
Teachers'  Retirement  Fund  of  New  York  City  published  in 
1915.  A  comparison  of  age  and  experience  figures  for  the 
teaching  forces  of  Cleveland  and  New  York,  shows  that  the 
lower  quartile  for  the  distribution  showing  the  ages  of  the 
Cleveland  teachers  exactly  corresponds  with  the  similar  figures 
for  those  of  the  teaching  forces  of  New  York  City.  Similarly 
the  corresponding  figures  of  the  distribution  showing  the 
teaching  experience  of  the  teachers  here  correspond  with  those 
showing  the  teaching  experience  in  New  York  City.  Hence 
we  may  feel  fairly  safe  in  using  the  New  York  actuarial 

208 


SYSTEMS  WITH  INADEQUATE  RESERVES:  LOCAL 


tables  in  making  a  prediction  concerning  the  teaching  force 
in  this  city.  On  this  basis  we  may  study  the  probabilities  con- 
cerning the  teachers  who  enter  the  Cleveland  force  at  about 
the  age  of  21  as  compared  with  those  of  teachers  brought  in 
at  about  the  age  of  43. 

Such  a  comparison  shows  that  only  about  one^third  of  the 
teachers  entering  at  the  younger  age  will  remain  in  the  teach- 
ing profession  long  enough  to  qualify  for  a  pension.  On  the 
other  hand,  eight  out  of  nine  of  those  who  come  in  at  the  age 
of  43  will  complete  their  term  of  service  and  will  be  eligible 
for  pension  benefits.  Taking  into  account  the  payments  to 
the  fund  made  by  all  of  the  teachers  entering  at  the  different 
ages,  the  refunds  made  to  those  who  resign,  the  proportion 
of  survivors  who  become  eligible  for  pensions,  and  the  expect- 
ancy of  life  after  beginning  to  participate  in  the  pension  bene- 
fits, a  careful  computation  shows  that  the  sum  involved  by  the 
pension  fund  for  teachers  employed  at  the  age  of  21  amounts 
to  about  $130  for  each  year  of  teaching  service  actually 
rendered,  while  the  corresponding  risk  for  teachers  employed 
at  the  age  of  43  amounts  to  about  $330  for  each  year  of 
teaching  service  actually  rendered. 

The  board  may  prorate  the  pensions  if  the  fund  proves  in- 
sufficient. In  1916  the  fund  had  a  membership  of  about  1,800, 
a  capital  of  about  $400,000  and  a  pension  roll  of  about  100 
beneficiaries.1 

statistical  data   for  the  years   1911-1917  are  shown 


The 
below : 

Year 

IQI I 
IQI2 
1913 
1914 
1915 
1916 
1917 


Teachers' 
Contributions 

$l6,ISO 
24,186 
30,466 
33,212 
35,225 
37,444 
43,025 


Taxes 

$34,716 
34,6o6 
35,565 
38,526 
42,139 
43,915 
47,460 


Interest  on 
Investments 

$6,439 
8,571 
n,450 
13,521 
17,455 
20,201 
23,840 


Pension 
Disbursements 

$l8,OOO 
22,945 

26,499 
29,755 
35,356 
39,901 
49,478 


Annual  Surplus 
(Excess  of 
Income 
Over 
Disburse- 
ments) 
$36,020 
46,630 
49,567 
58,367 
58,913 
58,253 
6l,I33 


Boston  Teachers'  Retirement  Fund.     At  the  establishment 
of  the  fund  in   I9oo2  only  a  very  inadequate  attempt  was 

the  enactment  in  May,  1919,  of  a  sound  state  retirement  system 


in  Ohio  (which  is  discussed  in  Chapter  XVIII)  an  opportunity  is  given 
to  the  Cleveland  and  other  local  pension  funds  of  Ohio  to  merge  with 
the  state  system  at  any  time. 

Massachusetts,  Acts,  1900,  ch.  237,  April  7. 

209 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

made  to  ascertain  whether  or  not  the  income  with  which  the 
fund  was  provided  would  accumulate  sufficient  assets  to  meet 
its  liabilities. 

The  fund  was  provided  with  a  revenue  consisting  of  teach- 
ers' contributions  of  $18  per  year  and  of  payments  by  annui- 
tants whose  total  contributions  amounted  to  less  than  $540. 
Upon  retirement  after  30  years  of  service  or  at  disability, 
an  annuity  was  granted,  if  applied  for,  the  amount  of  which 
was  to  be  determined  by  the  board  of  trustees  each  year, 
in  accordance  with  the  financial  condition  of  the  fund.  At 
resignation  of  a  member,  one-half  of  his  contribution  was 
refunded,  if  applied  for  within  three  months. 

Membership  in  the  fund  was  made  compulsory  for  all  new 
entrants  into  the  service  and  optional  for  those  already  in  the 
service.  Of  the  latter  1,256  have  elected  to  become  members. 

The  fund  was  divided  into  two  parts :  a  "permanent  fund" 
which  consisted  of  the  members'  contributions,  "gifts,  legacies 
and  sums  set  apart  by  the  board  of  trustees;  and  a  "general 
fund"  which  was  formed  of  the  contributions  of  the  members, 
the  interest  from  the  "permanent  fund,"  the  moneys  left  by 
deaths  and  resignation  of  members,  and  the  payments  by  the 
annuitants  to  complete  $540. 

The  board  of  trustees  and  its  committee  on  finance  were  of 
the  opinion  that  by  dividing  the  income  between  the  two 
funds  they  would  always  be  able  to  determine  "between  what 
limits  the  fund  may  be  safely  and  justly  used  in  the  payment 
of  annuities."  "By  this  system,"  the  report  of  the  finance 
committee  of  1902  said,  "it  will  be  seen  that  the  fund  is  always 
solvent."  The  actual  experience  of  the  fund,  however,  proved 
later  on  that  through  error  of  judgment  as  to  the  rate  of 
annuity  which  could  be  allowed  the  fund  failed  to  be  solvent. 

The  method  adopted  by  the  board  of  determining  what 
annuity  the  fund  could  afford  to  pay  was  rather  crude. 
In  1901  the  board  of  trustees  decided  that  "the  fund  would 

210 


SYSTEMS  WITH  INADEQUATE  RESERVES:  LOCAL 

allow"  $150.  In  the  year  1903  the  board  of  trustees  decided 
on  $168.  In  1904  it  decided  that  the  condition  of  the  fund 
warranted  the  payment  of  $180.  Since  that  year  and  up  to 
1914,  $180  was  the  annuity  paid. 

During  the  fourteen  years  from  1900  to  1914  the  number 
of  annuities  increased  from  7  to  249,  and  the  annuity  roll 
increased  during  the  same  period  from  $329  to  over  $45,000. 
The  membership  of  the  fund  exceeded  2,600  and  its  balance 
at  the  end  of  that  period  amounted  to  about  $392,000. 

In  the  year  1914  three  members  of  the  Massachusetts  Com- 
mission on  Pensions,  which  was  appointed  "to  report  fully 
and  in  detail  the  various  systems  under  which  pensions  are 
now  paid"  in  Massachusetts,  made  an  investigation  of  the 
fund.  Mr.  H.  D.  Brown,  the  actuary  of  the  commission, 
reported  that  his  estimate  of  the  assets  and  liabilities  of  the 
fund  showed  a  deficit  in  the  fund  of  $1,312,687  and  that  the 
fund  would  not  be  able  to  meet  its  future  liabilities  on  the 
basis  of  a  $180  annuity. 

The  board  of  trustees  immediately  engaged  Mr.  W.  J. 
Montgomery,  the  state  actuary,  to  investigate  and  report  what 
amount  of  annuity  the  fund  could  afford  to  pay.  He  reported 
on  September  14,  1914,  that  the  condition  of  the  fund  was 
such  that  an  annuity  of  only  $81  could  be  paid  existing  and 
prospective  pensioners  in  return  for  the  annual  contributions 
of  $18  without  incurring  a  deficiency,  and  that  if  the  payment 
of  $180  were  continued  to  the  members  already  retired,  then 
only  $6 1  could  be  paid  to  the  members  who  might  be  retired 
after  I9I4-1 

Finding  that  the  uniform  contribution  of  $18  per  year, 
regardless  of  age,  was  inadequate  and  unsound  and  could 
not  safely  guarante  even  a  reduced  annuity  of  $81,  the  actuary 
recommended  that  legislation  should  be  secured  by  which  the 
contributions  might  be  increased  and  graded  according  to  age 
and  that  a  gradual  reduction  of  annuities,  say  $25  or  $30  each 

1Report  of  the  State  Actuary  to  the  Board  of  Trustees,  1914.    14  p. 

211 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

year,  should  be  adopted  until  such  time  as  the  fund  shall  be 
on  an  adequate  basis. 

Upon  the  receipt  of  this  report  the  board  of  trustees  decided 
to  reduce  the  annuities  to  $132  and  a  year  later  it  further 
reduced  the  annuities  to  $120. 

The  annual  report  of  the  board  for  the  year  1917  contains 
the  following  passage : 

At  the  December  meeting  of  the  Board  at  which  the  rate 
of  annuity  for  the  ensuing  year  is  annually  established,  the 
question  what  annuity  our  Fund  will  allow  to  be  paid  to  our 
annuitants,  year  by  year  without  affecting  its  solvency,  which 
has,  of  late  greatly  interested  our  Board  of  Trustees  as  well 
as  our  annuitants  and  our  contributing  members,  came  up 
for  consideration,  some  members  of  our  Board  believing  that 
even  our  reduced  annuity  of  one  hundred  twenty  dollars  was 
too  large  and  that  the  annuity  should  be  still  further  reduced. 
After  some  discussion  it  was  finally  voted  to  make  no  change, 
and  for  the  year  1917  to  continue  the  annuity  rate  at  one 
hundred  twenty  dollars  a  year1  the  same  as  in  1916.  The  rate 
of  annuity  for  the  year  1918  will  be  fixed  at  the  regular 
monthly  meeting  of  the  Trustees  next  December. 

Boston  Teachers'  Permanent  Fund.  An  act  of  1908" 
provided  for  the  creation  of  this  fund  from  city  revenues, 
and  the  inclusion  in  it  of  the  members  of  the  contributory 
retirement  fund  just  described,  which  had  been  established  in 
1900.  Taken  together,  the  annuity  of  $180  from  one  fund 
and  the  pension  of  one-third  salary  from  the  other,  the  com- 
bined benefit  amounted  to  half  salary.  The  pension  could  be 
granted  only  after  65  years  of  age  and  10  years  of  service  or 
at  disability. 

The  fund  was  provided  with  an  income  consisting  of  a  city 
contribution  of  five  cents  for  each  $1,000  of  assessed  valuation 
of  taxable  property.  This  income  which  had  but  a  slow  rate 
of  increase,  as  compared  with  the  rapidly  increasing  pension 
expenditure,  could  not  remain  long  adequate.  It  took  the 

1The  capital  of  the  fund  at  that  time  amounted  to  about  $486,000. 
2Massachusetts,  Acts,  1908,  ch.  589,  June  3. 

212 


SYSTEMS  WITH  INADEQUATE  RESERVES  :  LOCAL 

fund  only  six  years  to  develop  an  excess  of  expenditure  over 
income  as  shown  in  the  following  table.1 

Receipts  by  Expenditure 

Year  Tax  Valuation  on  Pensions  Surplus  Deficit 

1908  $63,891  $1,678  $62,213 

1909  65,043  8,075  56,968 

1910  66,194  26,247  39,946 
19"         67,770          55,350          12,420 

1912  70,192         64,510         5,681 

1913  72,012         72,889         $876 

In  order  to  cover  the  deficiency,  the  fund  was  forced  to 
draw  upon  its  balance  which  amounted  in  1913  to  about 
$189,000,  and  which  would  have  been  expended  during  the 
next  four  or  five  years  had  the  fund  continued  to  operate  with 
the  same  income. 

At  that  critical  stage  in  the  development  of  the  fund,  the 
estimate  of  the  condition  of  the  fund  by  the  Massachusetts 
Commission  on  Pensions  was  made.  The  report  of  Mr.  H. 
D.  Brown,  the  actuary  of  the  commission,  showed  that  the 
fund  had  a  deficiency  of  $3,700,000,  which  would  have  to  be 
provided  for  if  the  fund  was  to  operate  on  a  reserve  basis. 

The  actuary  also  estimated  what  the  ultimate  cost  to  the 
city  would  be  if  the  fund  should  operate  on  a  cash  disburse- 
ment basis,  appropriating  the  necessary  amount  directly  each 
year  as  it  came  due.  He  found  that  for  the  same  number  of 
members  and  same  size  of  payroll,  the  annual  cost  to  the  city 
in  pensions,  which  in  1913  equaled  only  about  2  per  cent  of 
the  amount  expended  that  year  in  salaries,  would  increase  for 
the  next  sixty  years,  reaching  as  much  as  12  per  cent  of  the 
amount  expended  in  salaries.  Not  before  sixty  years  would 
the  fund  reach  the  normal  level  at  which  new  pensions  would 
be  counterbalanced  by  terminations  on  account  of  death.  The 
cost  to  the  city  would  then  normally  remain  at  the  high  level 
of  12  per  cent. 

The  only  immediate  effect  of  the  report  was  that  a  law 
was  passed  in  1915  increasing  the  income  of  the  fund  from 
five  to  seven  cents  per  $1,000  valuation.  The  fundamental 

Massachusetts,  House  Docs.,  1914,  No.  2450,  p.  49. 

2I3 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

question  whether  the  fund  should  be  operated  on  a  reserve  or 
cash  disbursement  basis  was  left  undecided. 

The  increase  of  the  fund's  income  could  give  the  fund  only 
temporary  relief.  The  increase  amounted  to  about  $30,000 
and  raised  the  1915  income  to  about  $105,000.  Out  of  this 
amount,  however,  as  much  as  $90,000  had  to  be  expended  on 
pensions  during  that  year,  leaving  an  unexpended  balance  of 
only  about  $i5,ooo.1 

In  the  year  1917  an  act  was  passed  by  which  the  fund 
became  subject  to  the  reimbursement  provisions  of  the  law 
of  1913.  The  state  reimburses  the  city  with  practically  the 
entire  amount  of  newly  granted  pensions,  as  may  be  seen  from 
the  following  statement: 

Amount  of 

Year  Ending       Pensions  Paid  Reimbursement  Balance  Paid 

July  i                  by  the  City  by  State  by  City 

1915  $8,782.55  $8,637.68  $I44-87 

1916  16,132.59  15,684.28  448.31 

It  would,  therefore,  appear  that  in  the  course  of  time  as 
the  old  pensioners,  retired  before  July  I,  1914,  die,  and  are 
dropped  from  the  pension  roll,  the  city  will  receive  from  the 
state  in  reinbursements  practically  the  entire  amount  it  will 
pay  for  pensions,  and  the  state  will  bear  practically  the  entire 
burden,  which,  as  already  shown,  will  increase  from  year  to 
year,  because  no  reserve  is  provided  against  the  future  pay- 
ments. 

Baltimore  Teachers'  Retirement  Fund.  This  fund  is 
managed  by  a  board  of  trustees  which  consists  of  the  city 
comptroller,  the  superintendent  of  instruction,  two  members 
of  the  board  of  school  commissioners,  and  three  members 
elected  by  the  teaching  force.  The  fund  derives  its  support 
from  a  contribution  by  the  teachers  and  from  a  discretionary 
appropriation  by  the  city.  The  teachers  contribute  I  per  cent 
of  their  salary  (max.  $14.40)  during  the  first  10  years  of 
their  service,  il/2  per  cent  (max.  $21.50)  the  next  10  years 

1  Annual  Report  of  the  Fund,  1915.  In  the  Minutes  of  Evidence  of  the 
Boston  School  Committee,  1916,  Feb.  21,  p.  19. 

214 


SYSTEMS  WITH  INADEQUATE  RESERVES  :  LOCAL 

and  2  per  cent  (max.  $28.80)  thereafter.  They  must  con- 
tribute in  total  an  amount  equal  to  one  year's  pension  before 
they  can  retire,  otherwise  their  pension  is  reduced. 

After  40  years  of  service,  20  of  which  must  have  been 
served  in  Baltimore,  a  teacher  is  entitled  to  retirement  (pro- 
vided the  approval  of  the  board  of  trustees  of  the  retirement 
fund  is  secured)  on  a  pension  of  one-half  of  the  average 
salary  of  the  last  5  years,  minimum  $260  and  maximum  $600. 
Proportional  pensions  are  paid  at  disability  after  20  years  and 
a  refund  of  one-half  of  the  member's  contributions  is  made 
at  resignation,  dismissal  or  death  after  any  length  of  service. 

In  the  year  1909,*  when  the  fund  was  established,  no  retire- 
ments were  made  and  no  expenditures  were  incurred.  That 
year's  receipts,  amounting  to  about  $14,000,  remained  in  the 
fund.  The  first  pension  expenditure  made  in  1910  amounted 
to  only  $7,670  which  was  considerably  less  than  the  amount 
of  the  teachers'  contributions.  The  excess  of  the  latter  over 
the  expenditure  was  increased  by  the  city's  $3,000  appropria- 
tion. During  the  third  year,  however,  the  pension  expendi- 
ture more  than  doubled,  thereby  exceeding  the  amount  of 
the  teachers'  contributions.  The  total  receipts,  including  these 
contributions,  interest  on  bank  balances  and  the  city's  $3,000 
appropriation,  resulted  in  only  a  very  slight  additional  balance. 
During  the  fourth  and  fifth  years  the  rapidly  increasing  dis- 
bursements forced  the  city  to  increase  its  appropriation  from 
$3,000  to  $8,200  and  $9,100  respectively.  Since  the  receipts 
from  members'  contributions  increase  much  slower  than  the 
disbursements  of  the  fund,  as  shown  in  the  following  table, 
it  is  evident  that  the  city  will  be  called  upon  to  grant  the  fund 
higher  and  higher  appropriations  each  year. 

Contributions  City 

Year  of  Teachers  Interest         Appropriations  Pension  Roll 

1909  $11,227  $56  $2,780  No 

IQIO         16,684          78l         3,000          7,67O 

1911  16,913          940         3.OOO         18,418 

1912  17,844         1,082         8,2OO         23,046 

1913  19,022  1,307  9,100  26,330 
1Maryland,  Acts,  1908,  ch.  78,  March  12. 

215 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

The  investment  of  the  fund  amounted  in  1913  to  about 
$33,430- 

Buffalo  Teachers'  Retirement  Fund.  Among  the  teachers' 
retirement  funds  in  this  country,  that  of  Buffalo  is  one 
of  the  oldest.  The  law  of  1896,*  by  which  this  system 
was  established,  provided  that  the  fund  should  consist  of 
contributions  from  teachers,  the  amount  of  which  should  not 
exceed  i  per  cent  of  their  salaries.  A  teacher  who  served 
40  years,  if  a  man,  and  35  years,  if  a  woman,  was  entitled  to 
retirement  on  a  pension  not  exceeding  one-half  his  final  salary. 
The  retirement  board  consisted  of  the  mayor,  the  superin- 
tendent of  education,  the  chairman  of  the  board  of  school 
examiners,  the  president  of  the  Principals  Association  and  the 
president  of  the  Women  Teachers  Association. 

After  about  ten  years  of  operation,  during  which  the  fund 
accumulated  a  balance  of  about  $72,000,  the  disbursements  of 
the  fund  exceeded  its  receipts.  In  view  of  this  excess  of 
disbursements  over  receipts  an  amendment  of  the  old  law 
was  secured  in  the  year  1909,  which  increased  the  teachers' 
contributions  up  to  2  per  cent  of  salary  and  authorized  the 
city  to  contribute  an  amount  equal  to  that  contributed  by 
the  teachers  during  the  preceding  year.2  At  the  same  rime 
the  benefits  were  made  more  liberal  by  reducing  the  required 
length  of  service  to  35  and  30  years  for  men  and  women 
respectively.3  The  provision  of  the  law  of  1896,  allowing  the 
board  to  use  not  only  the  income  but  also  the  principal  of  the 
fund,  and  to  reduce  the  amount  of  pension  if  necessary,  re- 
mained in  force. 

The  increase  of  the  teachers'  contributions  and  the  addition 
of  a  new  source  of  revenue  in  the  form  of  an  annual  appro- 
priation, which  has  been  fixed  by  the  city  at  $10,000  since 
1909,  have  temporarily  averted  an  exhaustion  of  the  fund 

'New  York,  Acts,  1896,  ch.  928. 

2New  York,  Acts,  1909,  ch.  554,  May  28. 

'For  detailed  provisions  of  the  law  see  table  on  page  303. 

2l6 


SYSTEMS  WITH  INADEQUATE  RESERVES  :  LOCAL 

and  have  permitted  the  fund  to  increase  its  principal,  which  in 
1915  amounted  to  about  $130,000.  As  the  disbursements  of 
the  fund  will  continue  to  increase  (they  already  exceed  the 
amount  of  the  teachers'  contributions)  the  city  will  be  com- 
pelled either  to  increase  its  appropriation  or  to  draw  upon  the 
principal  of  the  fund  or  reduce  the  amount  of  pension.  By 
doing  so,  it  may  prolong  the  existence  of  the  fund  for  a 
short  time,  but  ultimately  it  will  have  to  be  reorganized. 

One  of  the  latest  developments  in  the  system  is  the  prepara- 
tion of  an  actuarial  estimate  of  its  assets  and  liabilities.  It 
showed  that  the  total  liabilities  of  the  fund  amounted  to  about 
$3,800,000,  of  which  about  $400,000  represented  the  liability 
on  account  of  the  ninety-eight  pensions,  which  aggregated 
about  $40,000  annually.  The  assets  of  the  system  amounted 
to  only  about  $800,000,  leaving  a  deficiency  of  $3,000,000. 
The  actuary  reached  the  following  conclusions  :* 

If  no  change  is  made  in  the  contribution,  it  will  not  be  long 
before  reductions  will  have  to  be  made  and  the  beneficiaries 
of  these  funds  must  either  face  a  complete  readjustment  or 
still  be  in  doubt  as  to  the  exact  amount  of  their  pensions,  hav- 
ing only  the  very  unsatisfactory  knoweldge  that  eventually 
the  annuity  payments  will  be  exceedingly  small. 

We  would  suggest,  first,  that  an  opportunity  be  given  to 
the  employees  to  express  an  opinion  as  to  whether  or  not  they 
desire  a  continuation  of  these  benefits.  It  may  be  that  a 
majority  would  prefer  to  have  the  law  revoked  and  then  make 
provision  for  their  future  as  individuals.  It  might  be  well 
to  admit  that  the  scheme  was  ill-conceived  and  all  parties 
agree  to  undo  as  far  as  possible  what  has  been  done  and 
abolish  the  different  funds  (teachers',  police  and  firemen's 
funds)  by  having  the  city  return  to  the  employees  the  deduc- 
tions made  in  the  past  from  salaries,  while  at  the  same  time 
assume  the  responsibility  of  continuing  the  pension  for  those 
now  receiving  benefits. 

If  an  employee  were  told  that  the  benefits  called  for  in  the 
law  could  not  be  paid  and  that  consequently  he  was  receiving 

1Report  on  the  Firemen,  Police,  and  Teachers'  Pension  and  Retirement 
Funds,  March  3,  1917. 

217 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

back  his  contributions,  he  would  at  least  feel  as  though  he 
were  being  treated  fairly.  Those  who  are  now  on  pension 
could  have  no  complaint,  as  their  benefits  would  be  continued. 

If  it  is  preferred  not  to  abolish  the  funds,  but  to  make  a 
readjustment,  it  ought  to  be  on  some  permanent  basis.  Each 
member  should  receive  a  certificate  stating  that  he  is  a  member 
of  this  association  and  that  in  consideration  of  such  and  such 
a  payment  by  him,  accompanied  by  such  and  such  a  contri- 
bution from  the  city,  benefits  will  be  granted  in  accordance 
with  the  terms  thereof.  This  is  similar  to  the  action  of  an 
insurance  company  which  issues  its  definite  guarantee  to  its 
policyholders  in  the  form  of  a  contract  and  which  then  places 
all  its  resources  behind  the  contract. 

New  Orleans  Teachers'  Retirement  Fund.  The  system 
of  New  Orleans  has  been  in  operation  only  since  I9IO,1  yet  it 
has  already  met  with  difficulties.  Up  to  1913  the  fund  was 
supported  only  by  the  teachers.  They  contributed  I  per  cent 
of  their  salary  the  first  10  years  of  service  and  2  per  cent 
thereafter.  The  fund  provided  benefits  of  one-half  of  the 
average  salary  of  last  five  years  (min.  $300  and  max.  $600) 
upon  retirement  at  age  of  65  or  after  30  years  of  service,  10 
years  of  which  must  have  been  served  in  the  city,  and  it  paid 
proportional  pensions  at  disability.  One-half  of  the  teachers* 
contributions  were  refundable  at  death  or  resignation,  and 
the  full  amount  at  dismissal. 

After  three  years  of  operation  the  disbursements  of  the 
fund  exceeded  by  about  $4,000  its  receipts  from  teachers' 
contributions  and  from  the  interest  on  the  deposits.  To 
cover  this  deficiency  the  city  appropriated  $580,  a  donation 
of  $180  was  secured  and  a  festival  was  arranged,  the  proceeds 
of  which  amounted  to  about  $1,600.  Still  a  deficiency  of 
about  $1,500  remained  uncovered.  The  fund  had  to  draw 
upon  its  capital,  thereby  reducing  it  from  $18,000  to  $16,500. 
Next  year  (1915)  the  disbursements,  amounting  to  about 
$18,860,  exceeded  the  regular  receipts  by  about  $5,000.  This 
deficiency  was  covered  by  securing  an  appropriation  of  $1,000 

Louisiana,  Acts,  1910,  ch.  116. 

218 


SYSTEMS  WITH  INADEQUATE  RESERVES  :  LOCAL 

and  by  borrowing  $5,000  from  the  board  of  school  directors. 
In  1917  the  pension  disbursements  amounted  to  approximately 
$23,000  and  exceeded  the  regular  revenue  from  teachers' 
contributions  and  interest  by  more  than  $10,000.  The  defi- 
ciency was  covered  by  raising  $5,000  "from  proceeds  of  edu- 
cational day,  farm  and  live  stock  show,"  $4,000  from  sale  of 
waste  paper,  $200  from  royalties  on  spelling  lists,  and  $1,900 
from  an  appropriation  by  the  city.  The  capital  of  the  fund 
was  still  further  reduced  to  $11,120.  It  is  evident  that  the 
fund  cannot  exist  long  under  these  conditions. 

In  1918  a  bill  was  prepared  and  its  passage  secured  by 
which  the  Orleans  Parish  School  Board  was  required  to 
appropriate  at  least  as  much  as  the  assessment  paid  by  teachers, 
and  further,  the  rate  of  assessment  paid  by  the  teachers,  which 
ranged  between  i  and  2  per  cent,  was  changed  to  3  per  cent. 
One  of  the  officers  of  the  fund  says:  "By  the  provisions  of 
this  law  we  will  receive  annually  about  $60,000,  and  as  we  are 
now  paying  retired  annuities  of  about  $24,000,  we  feel  that 
in  a  short  time  the  fund  will  be  placed  on  a  stable  basis." 

Denver  Teachers'  Retirement  Fund.  This  system,  estab- 
lished in  1909, 1  is  supported  by  the  city  by  a  special  levy 
amounting  to  a  maximum  of  one-tenth  mill.  The  teachers 
do  not  contribute.  Men  may  be  retired  on  a  pension  of  $360 
at  age  of  60,  and  women  at  the  age  of  55,  provided  they  have 
served  25  years,  15  of  which  must  have  been  served  in  the 
city,  or  at  disability  after  at  least  10  years  of  service.  The 
granting  of  pensions  depends  entirely  upon  the  discretion  of 
the  city,  which  may  at  any  time  discontinue  granting  new 
retirements.  There  were  sixty  teachers  on  the  pension  list 
in  1917.  The  increase  in  the  disbursements  of  the  fund  is 
shown  below.2 

Year  Ending  Year  Ending 

June  30  Disbursement!  June  30  Disbursement* 

1910  $180  1914  10,080 

1911  3,000  1915  12,600 

1912  3,660  1916  16,110 

1913  7,200  1917  19,440 
1Colorado,  Acts,  1009,  ch.  214,  May  5. 

2On  June  30,  1917,  the  fund  had  a  cash  balance  of  $27,700. 

219 


CHAPTER  XIV 

SYSTEMS  WITH   INADEQUATE  RESERVES:  THE 
CHICAGO    FUND 

The  Chicago  Teachers'  Retirement  Fund  presents  a  history 
so  illuminating  as  to  warrant  a  treatment  somewhat  fuller 
than  that  accorded  the  other  systems  operating  with  inadequate 
reserves.  This  history  may  be  divided  into  three  periods. 
From  1895  to  1907  the  fund  was  wholly  contributory,  i.  e. 
supported  by  the  teachers  and  not  subsidized  by  the  city.  Part 
of  the  teachers  supported  it  but  a  considerable  part  opposed 
it  vigorously,  and  under  the  pressure  of  their  opposition  mem- 
bership was  made  optional.  The  second  period  started  in 
1907,  when  the  increasing  inadequacy  of  the  fund  resulted 
in  a  subsidy  by  the  city.  The  optional  feature  was  changed 
to  a  compulsion  with  certain  limitations.  The  increased  con- 
tributions of  the  city  temporarily  improved  the  condition  of 
the  fund,  which,  however,  continued  to  operate  on  an  actu- 
arially  unsound  basis.  The  third  period  is  now  beginning 
with  an  attempt  to  reorganize  the  system  on  an  actuarial  basis. 

The  Fund  Wholly  Contributory:  1895-1907.  The  law 
which  established  in  I8951  a  retirement  fund  for  teachers 
and  public  school  employees  of  Chicago  was  passed  at  the 
solicitation  of  teachers'  associations.  It  provided  for  the 
establishment  of  a  pension  board  composed  of  the  board  of 
education,  the  superintendent  of  schools  and  two  teachers, 
elected  by  the  members  of  the  fund,  thereby  giving  the  repre- 
sentatives of  the  city  the  majority  voice.  Membership  in  the 
fund  was  made  compulsory.  The  teachers  and  the  public 

Illinois,  Acts,  1895,  p.  312. 

22O 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

school  employees  were  to  contribute  to  the  fund  a  maximum 
i  per  cent  of  their  salaries.  This  revenue  was  thought  suffi- 
cient to  provide  pensions  of  half  salary,  maximum  $600  after 
25  years  of  service.  At  no  time  were  reliable  estimates  made 
of  the  real  cost  of  retirement  benefits.  The  city  was  not  called 
upon  to  contribute  any  part  of  the  cost,  the  law  explicitly  stat- 
ing that  "no  taxes  shall  ever  be  levied  or  an  appropriation  of 
public  money  be  made  for  said  fund.  *  *  *" 

During  the  first  year  of  the  fund,  the  disbursements 
amounted  to  only  $4,752.  They  rapidly  increased  from  year 
to  year  as  shown  in  the  following  table : 

Annual  Annual  Annual  Surplus 

Year  Receipts  Disbursements  (Excess  of  Receipts 

Over  Disbursements) 

1896  $38,500         $4,800  $33,700 

1897  4O,50O         19,400  2I.IOO 

1898  45,6OO         32,7OO  I2,9OO 

1899  54,ooo       46,300          7,700 

The  margin  between  the  inadequate  revenues  and  the  in- 
creasing disbursements  became  so  narrow  after  four  years  of 
operation  as  to  make  evident  that  within  a  year  or  two  the 
disbursements  would  exceed  the  receipts. 

In  February,  1900,  after  the  proposal  to  employ  an  actuary 
had  been  defeated,  the  board  of  trustees  appointed  a  com- 
mittee of  five  "to  study  the  question  and  take  it  up  with  the 
teaching  force  with  instructions  to  investigate  and  suggest 
what  changes  can  be  made  to  the  pension  law  so  that  the 
same  may  be  put  on  a  sound  basis."1  A  few  months  later 
the  disbursements  exceeded  the  receipts  and  the  question  as 
to  the  need  for  an  actuarial  -investigation  was  again  raised, 
not  in  the  board  of  trustees  but  in  the  pension  convention  of 
delegates  from  the  teaching  force.  The  convention  resolved 
that  the  investigation  of  the  committee  of  delegates  showed 
clearly  "the  insolvent  condition  of  the  pension  fund  and  its 
utter  inadequacy  to  meet  the  obligations  that  have  already 
been  assumed,  to  say  nothing  of  the  caring  for  future  pen- 
proceedings  of  the  Board,  Feb.  7,  iooa 

221 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

sions ;  and  that  "it  is  a  great  wrong  to  the  contributors  as  well 
as  those  pensioned  to  continue  under  the  present  law,"  and 
that  it  is  "the  duty  of  the  trustees  of  the  fund  to  properly 
protect  the  contributors;"  and  requested  the  board  "to  take 
some  action  to  provide  funds  for  employing  an  actuary  to 
amend  the  pension  law." 

The  actuary  engaged,  as  a  result  of  this  resolution,  reported 
in  March  as  follows: 

I  find  that  the  contribution  of  I  per  cent  is  insufficient  to 
provide  such  maximum  annuity  as  the  law  prescribes.  I  find 
that  in  no  ordinary  case  would  the  contribution  of  I  per  cent 
during  twenty-five  years  of  service  be  sufficient  to  provide 
an  annuity  much,  if  at  all,  exceeding  $50  per  annum.  For 
a  twenty  years'  term  of  contribution  this  amount  would  be 
considerably  less,  in  some  cases  not  one-half  of  the  maximum 
amount  just  suggested.  *  *  *  Yet  the  fund  has  been 
paying  in  just  such  cases  pensions  ranging  between  $400  and 
$600.  * 

The  report  showed  that  even  if  the  present  contributors 
were  to  forfeit  all  their  contributions  made  theretofore  and 
the  capital  of  the  fund  could  be  set  aside  exclusively  for  the 
pensioners  already  retired,  it  would  barely  cover  one-sixth 
of  the  necessary  amount.  This  would  leave  contributors  not 
yet  pensioned  to  start  anew  as  if  they  never  had  contributed 
to  the  fund,  and  would  provide  them  with  only  such  very 
small  benefits  as  their  future  contributions  might  earn  for 
them. 

The  actuary  pointed  to  some  of  the  inequitable  features  of 
the  system,  stating  in  part  that  "the  provision  requiring  equal 
contributions  for  equal  benefits  is  inequitable  between  con- 
tributors of  different  conditions  as  to  age,  term  of  contri- 
bution, term  of  service,  etc.  The  amount  of  the  annuity  or 
the  rate  of  contributions,  or  both,  should  be  varied  with  due 
regard  to  these  conditions."  He  submitted  recommendations 
for  the  amendment  of  the  law  and  suggested  that  until  the 

Proceedings  of  the  Board  of  Trustees,  April  3,  1901. 

222 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

proposed  amendments  should  be  adopted  all  pensions  be  re- 
duced to  a  nominal  amount  of  $5  or  $10  per  annum. 

Membership  in  the  Fund  Made  Optional.  About  that 
time  a  movement  was  started  among  the  teachers  against  the 
compulsory  contribution.  It  was  claimed  that  participation 
in  the  retirement  fund  was  a  private  not  a  public  matter  and 
that  the  state  had  no  constitutional  right  to  compel  the  teachers 
to  contribute.  The  compulsory  principle  was  branded  as 
"dangerously  socialistic."1  A  persistent  movement  carried 
on  by  some  of  the  more  violent  opponents  of  the  plan  finally 
secured  from  a  majority  of  the  teachers  an  expression  of 
opinion  against  it,  and  in  July,  1902,  an  amendment  to  the 
law  was  enacted,  under  which  any  contributor  who  filed  with 
the  board  of  trustees  a  notice  of  his  desire  to  withdraw  from 
the  fund  could  be  released.2  Commenting  upon  the  effect  of 
this  law,  one  of  its  leading  proponents  wrote : 

Since  that  time  over  one-fourth  of  the  teachers  have  with- 
drawn from  all  share  in  this  sort  of  insurance,  and  more  are 
withdrawing  every  day,  thereby  reducing  the  liabilities  of  the 
fund.  This  marks  the  end  of  any  general  interest  in  a  teachers' 
'pension'  or  retiring  fund.  The  'pension'  is  a  lost  cause. 
The  recent  reduction  of  annuities  from  $600  to  $240  is  a 
convincing  argument  against  the  system. 

While  the  proponents  of  the  optional  system  were  of  course 

aThis  attitude  was  well  reflected  in  an  article  by  Mr.  Edward  Manley 
of  the  Englewood  High  School  in  Chicago,  which  appeared  in  the  Edu- 
cational Review  of  1902,  p.  156.  The  following  comments  of  the  writer 
with  regard  to  retirement  funds  generally  are  interesting : 

"Only  in  the  case  of  teachers  and  other  employees  of  school  boards 
has  this  form  of  socialism  become  law  in  this  country.  In  some  states 
there  are  statutes  by  which  a  part — generally  one  per  cent. — of  the  salaries 
of  all  employees  of  school  boards  has  been  withheld  and  put  into  a 
'pension  fund.'  Money  thus  obtained  has  been  or  will  be  used  to  pay 
annuities  to  those  who  have  resigned  their  positions  after  teaching  the 
required  number  of  years.  Such  legislation  is  dangerously  socialistic  and 
would  fail  utterly  if  applied  to  a  less  docile  and  submissive  class  of  our 
citizens." 

"The  amendment  read  as  follows :  "Any  public-school  teacher  or 
public-school  employee,  a  part  of  whose  salary  is  now  or  may  hereafter  be 
set  apart  to  provide  for  the  fund  herein  created  by  this  act,  may  be 
released  from  the  necessities  of  making  further  payments  to  said  fund 
by  filing  a  written  notice  of  his  or  her  desire  to  withdraw  from  complying 
with  the  provisions  of  this  act." 

223 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

wrong  in  thinking  that  they  had  succeeded  in  breaking  down 
any  general  interest  in  a  retiring  fund,  they  had  seriously 
crippled  its  development  for  the  next  few  years. 

During  the  period  from  1901  to  1907,  when  the  fund 
operated  on  a  voluntary  basis,  as  many  as  2,000  teachers  with- 
drew from  the  fund,  and  very  few  new  teachers  joined  it; 
and  along  with  the  weakening  of  the  fund  from  outside,  an 
internal  destruction  was  going  on.  The  resources  of  the  fund 
were  falling  rapidly  and  at  the  same  time  the  disbursements 
were  rapidly  increasing  on  account  of  the  natural  but  unpro- 
vided-for  increase  in  the  number  of  retirements.  Pensions 
were  reduced  again  and  again.  The  first  reduction  in  1901, 
which  amounted  to  a  sudden  drop  from  $600  to  $240,  was 
followed  by  several  further  reductions  during  the  next  six 
years.  The  last  reduction,  made  in  1906,  cut  the  pension  down 
to  $135.  Still  the  resources  were  insufficient.  The  capital 
of  the  fund  had  to  be  drawn  upon,  causing  some  of  its  securi- 
ties to  be  sold.  All  these  reductions  imposed  a  considerable 
hardship  upon  the  beneficiaries  of  the  fund  and  the  efficiency 
of  the  schools.  The  loss  of  confidence  in  the  fund  is  illus- 
trated by  the  fact  that  in  one  month  about  1,000  teachers 
withdrew. 

Soon  the  teachers  themselves  realized  the  seriousness  of 
the  situation  and  started  a  movement  to  save  the  fund  which 
they  had  so  nearly  destroyed,  and  to  induce  those  teachers 
who  had  withdrawn  to  reenter  and  to  bring  in  those  who 
failed  to  join  during  the  optional  period.  They  had  to  secure 
legislation  which  would  make  membership  compulsory  for  all 
new  entrants,  thus  opposing  the  principle  of  voluntaryism 
for  which  they  had  fought  in  1901.  Through  the  last  six- 
teen years  they  have  devoted  considerable  time  to  two  objects : 
to  regaining  lost  membership,  and  to  securing  legislation  for 
city  contributions.  But  they  still  ignore  the  important  fact 
that  the  financial  basis  of  the  system  is  itself  unsound  and  that 
the  remedy  lies  only  in  reorganization. 

224 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

City  Contribution  and  Compulsion  for  New  Entrants 
Since  1907.  During  the  rapid  decline  of  the  fund  a  move- 
ment was  started  by  the  teachers'  association  to  secure  legis- 
lation covering  the  following  points :  ( I )  the  city  to  contribute 
to  the  fund,;  (2)  membership  to  be  compulsory  for  all  new 
entrants;  and  (3)  the  members  of  the  fund  to  have  a  majority 
representation  in  the  board  of  trustees.  With  this  movement 
the  second  period  in  the  history  of  the  fund  began.  No  change 
in  the  unsound  method  of  operation  was  contemplated.  The 
recommendations  made  by  the  actuary  in  1901,  to  put  the 
fund  on  a  sound  basis,  were  forgotten.  .It  was  evident  that 
the  majority  of  the  teachers  would  have  opposed  any  such 
increase  of  their  contributions  as  suggested  by  the  actuary. 

Two  bills  were  prepared  by  the  teachers'  associations,  both 
of  which  were  passed  by  the  legislature  on  May  24,  I9O7.1 
One  of  these  provided  that  the  city  should  contribute  to  the 
retirement  fund  the  interest  on  all  school  funds.  The  other 
struck  out  the  1895  provision  which  prohibited  the  city  from 
contributing  to  the  fund.  It  allowed  all  non-contributors 
until  the  end  of  the  year  to  join  the  fund,  provided  they  paid 
their  back  contributions.  Besides  granting  a  city  subsidy, 
it  offered  them  the  following  inducements:  (i)  all  services 
rendered  outside  of  Chicago  were  to  be  credited  for  retire- 
ment, providing  the  teacher  paid  contributions  for  that  period  ; 
(2)  the  fund  was  to  be  managed  by  a  board  of  nine,  six  of 
whom  should  be  teachers,  two  members  of  the  board  of 
education,  and  one  the  superintendent  of  schools;  (3)  the 
contributions  for  the  younger  teachers  were  to  be  lower  than 
under  the  old  plan.  The  scale  of  contributions  was  arranged 
as  follows:  during  the  first  5  years  of  service,  $5  annually; 
during  the  second  5  years,  $10;  during  the  third  5  years,  $15, 
and  after  15  years  of  service,  $30.  Such  a  scale  tended  to 
attract  the  younger  teachers,  who  otherwise  were  not  inter- 
ested in  a  retirement  fund,  and  to  keep  away  the  older  teachers 

Illinois,  Acts,  1907,  May  24,  p.  529-34.    Bills  842  and  843. 

225 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

who,  being  nearer  retirement,  would  have  imposed  upon  it 
much  greater  burdens.  The  provisions  making  membership 
compulsory  for  all  new  entrants  assured  the  fund  a  consider- 
able yearly  increase  of  membership. 

At  about  this  time  a  considerable  difficulty  arose  with  regard 
to  the  city's  contribution.  Although  the  city  comptroller  was 
required  by  the  new  law  to  add  to  the  pension  fund  the  interest 
on  school  funds,  he  withheld  this  money  on  the  advice  of  the 
corporation  counsel  that  the  requirement  was  an  unconsti- 
tutional diversion  of  public  money  to  a  private  purpose. 

The  teachers'  convention  thereupon  adopted  a  resolution 
requesting  the  board  of  trustees  to  institute  a  suit  to  establish 
the  validity  of  the  law.  Immediately  after  its  organization, 
the  board  addressed  a  letter  to  the  teachers,  stating  that  "in 
order  to  make  it  clear  that  the  payment  of  money  for  teachers' 
pensions  is  for  the  benefit  of  the  public  and  therefore  for  a 
public  purpose,  it  will  be  necessary  to  collect  data  to  show  that 
in  practical  operation  the  pensioning  of  public  employees  has 
proved  to  be  a  public  benefit."1  It  urged  the  teachers  to  sign 
a  petition  requesting  the  board  of  trustees  to  obtain  from  the 
board  of  education  one  month  leave  of  absence  for  the  presi- 
dent of  the  board  of  trustees  for  the  purpose  of  preparing 
material  for  legal  proceedings,  and  also  of  securing  before 
December  31  as  many  contributors  as  possible  from  among 
the  2,000  teachers  not  then  contributing.  The  petition  was 
signed  by  3,000  contributors  and  the  leave  of  absence  was 
granted.  As  a  result  of  the  membership  campaign  about  700 
teachers  reentered  the  fund  on  or  before  December  31,  1907, 
and  paid  in  arrears  of  $32,000  besides  their  regular  annual 
contributions. 

The  suit  was  started  on  November  19  of  the  same  year, 
and  was  won  in  the  lower  courts.  A  year  later  the  same  ques- 
tion was  raised  in  reference  to  all  the  pension  funds  in  Chi- 
cago by  an  injunction  proceeding  against  the  city  treasurer 

Report  of  the  Board  of  Trustees,  Dec.  21,  1912,  p.  43. 

226 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

to  enjoin  the  payment  of  any  public  moneys  for  pensions  to 
policemen,  firemen,  teachers  and  other  public  employees. 
Judge  Mack  sustained  the  constitutionality  of  all  the  pension 
acts  including  the  interest  act  above  mentioned,  in  the  course 
of  his  opinion  saying: 

The  court  is  clearly  of  the  opinion  that  the  use  of  public 
money  for  this  purpose  cannot  be  held  beyond  a  reasonable 
doubt  to  be  for  a  private  purpose.  On  the  contrary  the  court 
believes  that  the  use  of  public  money  for  the  pension  fund 
is  an  application  of  it  to  a  public  purpose. 

He  further  stated,  however,  that  he  did  not  mean  to  hold 
that  pension  legislation  gives  its  beneficiaries  a  vested  interest. 

In  1909  the  board  of  trustees  secured  legislation  which 
confirmed  the  interest  law  of  1907.*  A  provision  with  regard 
to  credit  for  outside  service  was  also  inserted,  which  required 
that  at  least  three-fifths  of  the  service  must  have  been  served 
in  the  city. 

The  money  paid  by  the  city  and  the  contributions  and 
arrears  paid  by  new  members  immediately  improved  the  affairs 
of  the  fund  and  permitted  the  board  to  increase  the  maximum 
pension  to  $225,  and,  a  few  months  later,  to  $250.  Although 
this  was  still  a  very  small  pension,  it  represented  to  the  bene- 
ficiaries a  considerable  increase  as  compared  with  the  $135 
pension  of  three  years  before.  A  letter  addressed  by  the 
board  to  the  teachers,  dated  October  22,  1910,  stated  that 
there  were  at  the  time  4,870  contributors  and  1,420  teachers 
who  did  not  contribute.  "The  1,420  comprise  those  who  had 
withdrawn  from  the  pension  law  of  1895  and  did  not  take 
advantage  of  the  opportunity  to  become  contributors  under 
the  law  of  1907.  Many  of  those  who  neglected  that  oppor- 
tunity wish  to  have  another  granted  to  them."2 

No  reliable  actuarial  investigations  were  made  to  determine 
whether  the  fund  would  be  able  to  pay  the  increased  pensions. 
Yet  the  board  stated  in  its  letter  that  "the  policy  of  the 

Illinois,  Acts,  1909,     p.  384-88. 

2Report  of  the  Board  of  Trustees,  Oct.  22,  1910,  p.  3-4. 

227 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

trustees  has  been  to  so  administer  the  fund  that  the  annuities 
need  never  be  reduced,  and  with  that  object  in  view,  the  inter- 
ests of  the  teachers  just  beginning,  who  may  become  a  risk 
twenty-five  years  hence,  have  been  preserved  by  increasing 
the  invested  fund.  The  reserve  fund  needs  to  be  increased 
to  $1,000,000.  The  funds  from  other  sources  than  teachers' 
contributions  should  be  augmented.  How  each  is  to  be  done 
is  a  matter  for  the  contributors  to  decide." 

The  sum  consumed  for  annuities  will  increase  year  by  year 
and  the  income  should  increase  also.  The  teachers  have  been 
generous  beyond  their  means.  If  the  public  wishes  profes- 
sional teachers,  it  must  assist  in  some  way  to  make  conditions 
such  that  teachers  may  feel  that  if  they  give  their  whole  energy 
to  teaching,  they  will  not  come  to  want  when  they  can  work 
no  longer.  The  majority  of  teachers  have  financial  responsi- 
bilities thrust  upon  them  which  renders  it  impossible  to  put 
by  a  competency  for  the  years  of  disability,  were  the  salaries 
sufficient  for  oneself.  The  occupation  consumes  all  of  the 
teacher's  attention,  and  with  the  requirements  demanded  of 
them  in  these  changing  social  conditions,  no  time  is  left  for 
giving  heed  to  business  investments.1 

As  shown  by  these  quotations  the  board  ignored  the  fact 
that  the  system  was  fundamentally  unsound.  While  the  build- 
ing up  of  a  million  dollar  reserve  was  a  commendable  enter- 
prise it  would  not  put  the  fund  on  a  solvent  basis  but  merely 
prolong  its  uncertain  existence. 

Encouraged  by  their  success  in  the  matter  of  legislation  in 
1907  and  1909,  the  board  of  trustees  took  steps  to  secure 
legislation  which  would  authorize  the  board  of  education  to 
contribute  an  additional  amount,  and  to  enable  the  teachers 
to  join  who  had  failed  to  do  so  in  1907.  Two  bills  prepared 
by  it  became  law  on  July  i,  191 1.2  The  board  of  education 
was  authorized  to  make  an  additional  annual  appropriation 
which  together  with  the  interest  from  school  funds  would 
equal  the  total  amount  contributed  by  the  teachers,  and  the 

1Report  of  the  Board  of  Trustees,  Oct.  22,  1910,  p.  4. 
Illinois,  Acts,  1911,  p.  511-12. 

228 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

non-contributors  were  given  one  year's  time  to  join  the  fund 
on  condition  that  they  pay  their  back  contributions  with 
interest. 

The  next  action  of  the  board  was  to  increase  the  pension 
from  $250  to  $300.  This  increase  was  adopted  on  the  basis 
of  a  report  of  the  committee  on  increase,  dated  February  17, 
1912,  which  stated:  "We  are  desirous  of  giving  the  whole 
income  to  the  pensioners  as  rapidly  as  possible  but,  at  the 
same  time,  do  not  think  it  wise  to  advance  immediately  to  the 
maximum  figure,  $400,  lest  our  income  may  not  meet  our 
outgo."1  Some  calculations  were  made  by  the  members  of 
the  committee  but  these  calculations  were  not  reliable  and  no 
actuarial  investigation  or  valuation  of  the  assets  and  liabili- 
ties of  the  fund  was  made. 

The  two  acts  passed  in  1911  and  the  subsequent  increases 
of  the  fund's  resources  and  of  the  amount  of  annuity  paid 
considerably  strengthened  the  once  shattered  confidence  of  the 
teachers  in  the  fund.  Within  one  year  more  than  500  non- 
contributors  returned  to  the  fund  and  paid  in  about  $65,000 
in  "lump  sums"  (back  assessments)  and  about  $14,000  in 
current  contributions.2  On  account  of  the  increase  in  the 
rate  of  the  city  contribution,  the  income  from  this  source 
more  than  doubled  during  the  year  1912,  jumping  from 
$78,000  to  $i85,ooo,3  and  the  excess  of  income  over  disburse- 
ments also  about  doubled,  increasing  from  $93,000  to 
$182,200.  During  the  four  years  1909-1912,  the  capital  of 
the  fund  increased  400  per  cent,  reaching  on  June  i,  1913, 
$468,000. 

Desiring  to  find  out  how  many  teachers  from  among  the  ap- 
proximately 800  who,  having  completed  25  years  of  service 
were  eligible  to  retirement,  would  retire  if  the  pension  were 
increased  from  $300  to  $350,  and  how  many  more  would 
retire  if  it  were  increased  to  $400,  the  board  sent  out  a  ques- 

1Report  of  the  Board  of  Trustees,  1912,  Feb.  17,  p.  16. 
2Report  of  the  Board  of  Trustees,  1912,  Dec.  21,  p.  44. 
'Year  ending  July  I,  1912. 

229 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

tionnaire.  On  the  basis  of  the  returns,  the  board  decided  in 
December,  1912,  to  increase  the  pension  to  $35O.1  This  was 
the  second  $50  increase  in  the  same  year. 

The  great  activity  of  the  teachers  in  the  matter  of  obtaining 
new  pension  legislation  was  continued  the  next  year.  While 
the  law  of  1911  established  the  principle  of  equal  contributions 
by  the  teachers  and  by  the  city,  the  bill  prepared  by  the  board 
of  trustees  in  1913  authorized  the  board  to  contribute  twice 
the  amount  of  the  teachers'  contributions. 

No  increase  of  the  teachers'  contributions  was  contem- 
plated, although  the  average  salaries  had  steadily  increased  as 
shown  in  the  following  table  :2 

1887 $641 

1897 725 

1904 812 

1907 857 

1909 911 

1911 988 

1913 1,054 

The  bill  became  a  law  on  June  26,  1913.  It  made  manda- 
tory upon  the  city  what  had  been  permissive  under  the  law  of 
1911,  the  contribution  of  an  amount  equal  to  that  contributed 
by  the  teachers.  It  also  gave  another  opportunity,  the  fourth 
and  the  most  ample,  to  enter  the  fund  to  those  who  had 
not  theretofore  entered.  They  were  given  three  years  time 
within  which  to  do  so. 

Meanwhile  the  disbursements  had  continued  to  increase 
more  rapidly  than  the  income,  as  shown  in  the  following  table, 

Year  Ending  Annual  Annual  Annual  Surplus 

Dec.  31  Receipts  Disbursement*  (Excess  of  Receipts 

Over  Disbursementi) 

1912  $298,400  $Il6,20O  $l82,2OO 

1913  267,200  157,400  109,800 

1914  278,900  l85,IOO  93,8OO 

The  excess  income  of  1914  fell  even  below  that  of  the  year 
1910,  when  the  city  contributed  only  interest  on  school  funds. 
During  the  following  two  years,  however,  the  excess  income 
increased  on  account  of  "lump  sum"  payments  made  by  for- 

1Report  of  the  Board  of  Trustees,  Dec.  21,  1912,  p.  52,  53. 

2Compiled  from  Reports  of  Chicago  Board  of  Education,  1909  (p.  101) 
and  1911.  The  figure  for  1913  was  taken  from  Educational  Survey  of 
Cleveland  Foundation,  vol.  on  Teaching  Staff,  1916,  p.  20. 

230 


SYSTEMS  WITH  INADEQUATE  RESERVES:  CHICAGO 

mer  contributors  who  reentered  the  fund  in  large  numbers 
before  the  time  limit  (July,  1916)  expired,  and  back  assess- 
ments paid  by  annuitants  who  were  completing  their  pay- 
ments of  $450. 

First   Step   towards   Actuarial   Reorganization   in    1917. 

The  move  for  actuarial  reorganization  of  the  fund  came  from 
outside  the  fund.  Public  opinion  in  the  state  began  to  realize 
that  all  was  not  well  with  their  pension  funds.  The  state  ap- 
pointed a  commission  in  January,  1916  "to  investigate  the  oper- 
ation of  all  pension  laws  heretofore  enacted  in  the  state,  to 
gather  together  all  available  information  as  to  the  present  and 
probable  future  cost  of  maintaining  the  funds  created  by  said 
laws,  and  to  collect  all  available  information  in  regard  to  the 
operation  of  similar  laws  in  other  states  and  countries."  The 
commission  was  authorized  to  employ  actuarial  assistance. 

In  investigating  the  Chicago  fund,  the  commission  found 
that  on  account  of  accrued  liabilities  the  fund  had  an  actuarial 
deficiency  of  more  than  five  million  dollars,  that  "this  de- 
ficiency will  increase  under  the  present  method  of  operation" 
and  that  "the  time  is  therefore  at  hand  to  put  the  system  on 
a  sound  financial  basis."1 

After  discussing  the  matter  with  the  retirement  board,  the 
commission  prepared  a  bill  intended  to  provide  the  fund  with 
a  more  adequate  income.  Contributions  of  the  members  were 
increased  according  to  the  years  of  teaching  experience.  Those 
with  4  years  or  less  were  to  contribute  $15 ;  those  with  4  to  8 
years  were  to  contribute  $25 ;  those  with  8  to*  12  years  were 
to  contribute  $30;  and  those  with  more  than  12  years  were 
to  contribute  $40. 

The  aggregate  contributions  of  a  member  were  raised  from 
$450  to  $800.  With  regard  to  retirement  conditions  a  new 
provision  was  introduced  requiring  that  the  applicant  be  at 
least  50  years  of  age. 

*At  the  same  time  the  commission  noted  that  the  fund  is  in  better 
financial  condition  than  most  of  the  funds  in  the  state. 

231 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

There  was  little  in  these  two  provisions  that  could  arouse 
the  enthusiasm  of  teachers.  Another  provision  which,  how- 
ever, made  the  bill  more  acceptable  to  them  was  the  require- 
ment that  the  city  must  (not  merely  might  as  heretofore) 
contribute  twice  as  much  as  the  teachers.  The  result  of  the 
bill  would  thus  be  that  while  the  teachers  would  have  con- 
tributed about  two  and  a  half  times  as  much  as  before,  the 
city  would  have  contributed  at  least  five  times  as  much. 

The  fact  that  the  increase  of  these  contributions  was  doubly 
compensated  by  the  increase  in  the  city's  contributions  was, 
however,  little  discussed  by  the  teachers.  The  attitude  was 
taken  that  the  bill  required  new  sacrifices  of  them  and  that 
they  should  agree  to  it  only  on  the  condition  that  another 
bill  which  they  themselves  prepared  providing  for  their  tenure 
of  office  (a  matter  then  greatly  discussed)  was  passed.  A 
committee  was  appointed  and  the  necessary  funds  for  their 
work  provided,  to  request  of  the  legislature  that  the  tenure 
of  office  bill  should  first  be  passed,  and  unless  passed,  to  re- 
fuse to  support  the  pension  bill.  The  pension  measure  was 
not  discussed  on  the  ground  of  principle.1  It  was  viewed 
merely  as  a  tool  for  securing  another  measure,  the  merits  of 
which  had  really  nothing  to  do  with  the  pension  issue. 

Several  features  of  the  old  system,  the  change  of  which 
would  be  very  desirable  from  a  broad  social  point  of  vievr,  were 
left  unchanged  in  the  bill.  In  the  first  place  the  tontine  fea- 
ture was  preserved  under  which  the  teacher  who  resigned  or 
was  dismissed  before  15  years  of  service  forfeited  one-half 
of  all  he  contributed  and  all  the  interest  on  that  amount; 
the  teacher  who  resigned  or  was  dismissed  after  15  years  of 
service  forfeited  all,  not  merely  half,  of  his  contributions; 
and  the  dependents  of  the  deceased  teacher  had  no  daim  to 
his  contributions.  The  abolition  of  this  tontine  feature  and 
the  establishment  of  a  savings  feature  instead  of  it  \rould  have 

1Reports  and  Circulars  in  the  Proceedings  of  the  Board  of  Trustees, 
Feb.  and  March,  1917. 

232 


SYSTEMS  WITH  INADEQUATE  RESERVES  :  CHICAGO 

required  still  larger  contributions  from  teachers  and  would 
have  therefore  met  with  opposition. 

In  the  second  place  the  composition  of  the  board  in  which 
the  public  officials  were  in  the  minority,  although  the  major 
part  of  the  fund's  money  would  have  been  contributed  by  the 
public,  was  preserved  apparently  because  a  change  in  it  would 
have  raised  vigorous  objections  from  the  teachers. 

In  the  third  place,  no  change  was  made  from  a  "flat"  to  a 
"graded"  annuity,  because  the  latter,  although  highly  desir- 
able from  the  point  of  view  of  efficiency  of  service  and  public 
interest,  was  not  popular  with  the  majority  of  the  teachers. 
Furthermore,  the  age  limit  was  fixed  rather  low,  still  allowing 
early  retirements,  and  the  provision  allowing  the  board  to 
prorate  benefits  was  maintained,  thus  showing  evidence  'that 
even  under  the  new  bill  the  sound  operation  of  the  system  was 
not  altogether  assured. 

The  bill  in  no  way  provided  for  a  sound  system.  It  can 
be  regarded  only  as  an  attempt  to  mend  the  affairs  of  an  un- 
sound system  in  such  a  way  as  to  meet  the  traditions  and  prej- 
udices which  have  grown  up  during  its  operations. 


233 


CHAPTER  XV 

THE  MASSACHUSETTS  FUND,  THE  FIRST  SCIEN- 
TIFIC SYSTEM ;  THE  CONNECTICUT  FUND 

Of  all  the  teachers'  retirement  systems  in  this  country  the 
Massachusetts  system  was  the  first  to  be  reorganized,  at  least 
partly,  on  an  actuarial  reserve  basis.  The  contributions  of 
the  teachers  are  deposited  to  a  reserve,  whereas  the  contribu- 
tions of  the  government  are  immediately  disbursed.  The  sys- 
tem operates,  therefore,  on  what  may  be  termed  a  "semi-re- 
serve" basis. 

History  of  the  System.  The  first  state-wide  teachers'  pen- 
sion legislation  enacted  in  Massachusetts  was  embodied  in  a 
law  passed  in  1908, 1  since  superseded  by  the  law  of  1913,  de- 
scribed below.  This  law  was  effective  only  in  cities  and  towns 
where,  upon  petition  of  not  less  than  5  per  cent  of  the  voters, 
it  had  been  submitted  at  the  following  city  or  town  election 
and  accepted.  Under  this  act  the  school  committee  of  such 
a  city  or  town  could  retire  any  teacher  who  was  60  years  of 
age  or  over  and  had  served  25  years,  granting  him  a  pension 
not  to  exceed  one  half  of  his  salary  (max.  $500).  No  contri- 
butions were  required  from  teachers.  The  system  was  to  be 
operated  on  a  purely  "cash  disbursement"  basis,  the  amount 
needed  for  the  payment  of  pensions  being  appropriated  each 
year. 

The  cities  and  towns  of  Brookline,  Cambridge,  Dalton, 
Framingham,  Hardwick,  Lynn,  Marion,  Milton,  Nahant, 
Pittsfield,  Swampscott,  Wareham,  Wellesley  and  Winchester 
availed  themselves  of  this  act. 

Massachusetts,  Acts,  1908,  ch.  498  and  ch.  589. 

234 


MASSACHUSETTS  AND  CONNECTICUT  FUNDS 

In  the  year  19 lo1  a  report  on  old  age  pensions,  annuities 
and  insurance  was  issued  by  a  state  commission  which  had 
been  appointed  in  1907.  It  contained  considerable  data  on 
social  insurance,  annuities  and  pension  systems  in  this  coun- 
try and  abroad,  and  gave  a  considerable  impetus  to  the  pension 
movement  in  Massachusetts. 

In  accordance  with  a  resolution  of  the  legislature  in  1911, 
requesting  the  board  of  education  to  investigate  the  advisa- 
bility of  establishing  a  state-wide  retirement  system,  a  report 
was  submitted  in  1913  which  stated  in  part:2 

A  careful  examination  of  the  methods  and  results  of  pro- 
viding retirement  allowances  for  teachers  in  other  states  and 
countries  and  of  the  conditions  peculiar  to  Massachusetts, 
leads  the  board  to  the  conclusion  that  if  general  legislation  is 
to  be  enacted  providing  for  the  payment  by  the  state  or  local 
community  of  retirement  allowances  to  superannuated 
teachers,  such  legislation  should  be  based  on  the  general  prin- 
ciples of  social  insurance  as  given  effect  in  the  act  providing 
retirement  allowances  for  state  employees  (under  act  of 
1911). 

The  report  explained  the  principle  of  social  insurance  to  be 
substantially  as  follows : 

By  means  of  state  legislation  and  under  state  administration 
or  at  least  supervision,  designated  classes  of  persons  are  re- 
quired to  insure  themselves  against  loss  or  decrease  of  earning 
power  due  to  age,  accident,  invalidity  or  other  similar  con- 
tingencies. The  person  insured  is  required  to  make  contri- 
butions in  amounts  varying  according  to  circumstances, 
towards  meeting  the  cost  of  this  insurance ;  and  he  also  shares 
in  a  measure  in  the  administration  of  the  funds  established 
for  that  purpose.  That  part  of  the  cost  of  the  insurance  which 
is  not  met  by  the  contribution  of  those  insured  is  usually  pro- 
vided by  the  state  and  by  the  employing  authority  in  shares 
varying  according  to  conditions  existing  in  the  employment. 

A  bill  for  the  establishment  of  a  retirement  system  embody- 

1Massachusetts  Commission  on  Old  Age  Pensions,  Annuities  and  In- 
surance, Jan.,  1910.  Mass.  House  Docs.,  1910,  No.  1400,  410  p. 

Massachusetts  Board  of  Education.  Special  Report  on  Teachers' 
Retirement  Allowances,  Jan.,  1913,  p.  6.  (In  Mass.  House  Docs.,  1913, 
No.  1926.) 

235 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ing  these  principles  was  submitted  together  with  the  report 
and  was  passed  on  June  19,  1913,  to  go  into  effect  on  July  I, 

1914.  The  law  was  subsequently  amended  in  the  years  1914, 

1915,  1916  and  1917. 

Provisions  of  the  System.  The  law  applies  to  all  teachers, 
principals,  supervisors  and  superintendents  employed  in  pub- 
lic day  schools1  within  the  commonwealth,  outside  of  Boston, 
which  has  a  separate  system. 

The  law  provides  that  any  teacher  may  retire  voluntarily 
after  reaching  60  years  of  age  and  receive  the  retirement 
benefit.  Membership  in  the  fund  is  made  compulsory  for  all 
teachers  entering  the  service  after  July  I,  1914.  Those 
already  in  the  service  may  enter  the  fund  upon  application. 
Of  the  latter  6,185  joined  the  fund  before  the  end  of  the 
year  1914. 

The  system  consists  of  two  funds:  the  annuity  fund  con- 
stituted by  the  teachers'  contributions,  and  the  pension  fund 
consisting  of  state  appropriations. 

The  annuity  fund  is  put  squarely  on  an  actuarial  reserve 
basis,  and  this  constitutes  doubtless  the  most  important  fea- 
ture of  the  system.  In  this  respect  the  first  report  of  the 
board  says:2 

As  many  pension  systems  throughout  the  country  have  come 
to  grief  through  lack  of  sound  foundation,  the  Massachusetts 
law  provides  that  the  retirement  system  shall  be  on  a  strong 
financial  and  actuarial  basis.  By  law,  reports  are  to  be  made 
to  the  state  insurance  commissioner  and  the  latter  ex-officio 
is  a  member  of  the  teachers'  retirement  board.  The  retire- 
ment system  is  operating  upon  the  mortality  table  used  by 
most  of  the  life  insurance  companies  doing  business  in  this 
commonwealth. 

The  contributions  of  the  members  are  paid  into  the  annuity 
fund  and  carried  to  their  respective  accounts.  They  accumu- 

1This  does  not  include  industrial  schools,  the  teachers  in  which  come 
under  the  provisions  of  the  law  granting  retirement  allowances  to  state 
employees  generally.  ft 

Massachusetts   Pub.  Docs.   1915,   No.   109,  p.  7. 

236 


MASSACHUSETTS  AND  CONNECTICUT  FUNDS 

late  with  interest1  and  constitute  for  each  member  an  indi- 
vidual reserve  from  which  his  annuity  is  eventually  paid.  The 
amount  of  the  contribution  is  determined,  as  stated,  according 
to  mortality  tables. 

The  annual  rate  of  contributions  is  fixed  by  the  retirement 
board  on  July  I  of  each  year,  but  must  neither  be  less  than 
3  per  cent  of  salaries  nor  more  than  7  per  cent  in  any  year 
and  not  less  than  $35  nor  more  than  $100.  The  board  adopted 
the  5  per  cent  rate  in  1914,  and  in  1915  it  stated  that  "as  the 
5  per  cent  rate  seems  to  meet  with  the  approval  of  practically 
all  of  the  members  of  the  retirement  association  it  is  probable 
that  the  5  per  cent  rate  will  be  continued  indefinitely."2 

The  law  provides  that  no  person  shall  contribute  a  larger 
sum  than  is  necessary  to  purchase  an  annuity  of  $500  at  age 
60,  or  $600  at  age  65,  or  approximately  $750  at  age  7O.S 

Teachers  appointed  before  1914,  who  have  served  at  least 
15  years  in  the  state,  receive  the  same  pension  as  if  they  con- 
tributed for  thirty  years.  The  minimum  retiring  allowance, 
consisting  of  the  annuity  plus  pension,  is  moreover  fixed  at 
$300. 

A  disability  clause,   effective  July   i,    1917,   provides   for 

aThe  original  law  provided  that  interest  should  be  credited  at 
3  per  cent.  An  amendment  adopted  in  1916  provided  that  the  interest 
actually  earned  shall  be  credited.  Four  per  cent,  was  earned  in  1916. 

2Bulletin  No.  2,  1915,  p.  6. 

8"A  teacher  may  determine  approximately  what  his  own  annuity 
will  be  by  multiplying  his  accumulated  assessments  by  certain  per- 
centages at  different  ages  of  retirement.  At  age  sixty  the  annuity  will 
be  approximately  9.38  per  cent  of  the  accumulated  assessments ;  at  age 
sixty-one,  9.71  per  cent;  at  age  sixty-two,  10.07  per  cent;  at  age  sixty- 
three,  10.45  per  cent;  at  age  sixty-four,  10.86  per  cent;  at  age  sixty-five, 
11.31  per  cent;  at  age  sixty-six,  11.78  per  cent;  at  age  sixty-seven, 
12.29  per  cent;  at  age  sixty-eight,  12.84  per  cent;  at  age  sixty-nine, 
J3-43  per  cent ;  and  at  age  seventy,  14.07  per  cent." 

"Examples — X  joins  the  retirement  association  in  1914  at  age  thirty. 
If  he  contributes  $35  per  year  for  thirty  years  his  accumulated  assess- 
ments will  amount  at  3  per  cent  interest  to  $1,683.87.  If  he  retires  at 
age  sixty  his  annuity,  derived  from  his  own  contributions,  will  be 
9.38  per  cent  of  this  amount,  or  approximately  $157.95.  Under  the  law 
he  is  entitled  to  a  pension  of  equal  amount  from  the  state  treasury, 
making  the  total  retiring  allowance  approximately  $315.90." — Massachu- 
setts Retirement  Board,  Bulletin  2  (1914). 

237 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

disability  retirement  after  20  years  of  service  upon  a  smaller 
retiring  allowance.  A  refund  of  teacher's  own  contributions 
with  interest  is  provided  upon  death,  resignation  or  dismissal. 
Refunds  are  made  in  one  sum  if  withdrawal  takes  place  before 
six  annual  contributions  have  been  paid;  otherwise  in  four 
annual  instalments.  Some  withdrawing  teachers  have  left 
their  contributions  on  deposit  as  they  expect  to  reenter  the 
service  at  some  future  date.  Another  interesting  feature  is 
that  a  member  may  select  a  smaller  annuity  for  himself  with 
the  provision  that  any  balance  of  his  contributions  with  inter- 
est may  be  paid  to  his  legal  representatives  in  case  he  dies 
before  the  total  amount  of  annuity  payments  received  equals 
the  amount  of  his  contributions  with  interest  to  the  time  of 
retirement. 

After  consulting  with  the  insurance  commissioner,  the  board 
adopted  as  the  basis  of  its  computation  of  the  probable  mor- 
tality of  the  members  of  the  fund  the  American  experience 
table,  the  standard  table  prescribed  for  life  insurance  companies 
doing  business  in  Massachusetts.  The  law  provides,  how- 
ever, that  the  board  may  change  the  mortality  table  from  time 
to  time.  If  this  table  represents  the  true  mortality  rate  of  the 
members,  and  if  the  assumed  rate  of  interest  is  realized  by 
investments  of  the  fund,  the  fund  is  absolutely  solvent. 

It  will  undoubtedly  be  necessary  for  the  board  in  the  near 
future  to  change  the  mortality  table  because  the  recent  experi- 
ence of  England  and  that  of  the  city  of  New  York  proved 
that  the  mortality  of  the  teachers  is  lower  than  that  obtain- 
ing among  the  population  at  large  and  that  their  annuities 
therefore  cost  more.  Whereas  the  American  experience  table 
shows  that  a  person  60  years  of  age  is  expected  to  live  13.4 
years  longer,  the  New  York  City  experience  shows  that  a 
teacher  60  years  of  age  is  expected  to  live  only  12.7  if  a 
man,  but  as  many  as  16.5  years  if  a  woman.1  Since  the  women 
teachers  are  greatly  in  the  majority  it  is  evident  that  the  differ- 

JNew  York  City  Commission  on  Pensions.  Report  on  Teachers'  Re- 
tirement Fund,  1915,  p.  38. 

238 


MASSACHUSETTS  AND  CONNECTICUT  FUNDS 

ence  between  the  American  experience  mortality  rate  and  the 
teachers'  mortality  rate  is  considerable. 

The  management  of  the  fund  is  entrusted  to  a  board  of 
seven  members,  consisting  of  the  insurance  commissioner, 
the  bank  commissioner,  the  commissioner  of  education,  three 
representatives  elected  by  the  members  of  the  fund,  and  one 
other  person  elected  by  the  six  members  first  mentioned.  It 
is  evident  that  inclusion  in  the  board  of  the  insurance  and  bank 
commissioners  will  assure  the  fund  a  proper  financial  manage- 
ment. The  board  has  elected  a  secretary  well  acquainted  with 
actuarial  problems. 

The  report  of  the  retirement  board,  as  of  December  31, 1916, 
states  that  the  membership  of  the  fund  was  9,667.  Of  these 
1,591  entered  the  service  for  the  first  time  in  1916.  Two 
hundred  twenty-six  members  were  on  the  retired  list  and  the 
annual  retiring  allowance  for  the  year  amounted  to  $85,078, 
of  which  only  $837  was  derived  from  contributions  from  the 
115  members  who  paid  assessments  before  retiring,  and  the 
balance  was  derived  from  state  appropriations.  The  total 
capital  of  the  association  amounted  to  $824,105. 

State  Appropriation  Not  On  a  Reserve  Basis.  The  weak 
point  of  the  Massachusetts  system  lies  in  the  fact  that  the 
state  appropriation  for  pensions  is  not  carried  on  a  reserve 
basis.  The  state  merely  appropriates  each  year  the  amount 
needed  for  the  payment  of  pensions  for  that  year.  This  will 
naturally  result  in  a  comparatively  small  cost  to  the  state  in 
the  beginning  and  a  considerably  heavier  cost  in  the  future, 
as  shown  by  the  following  rough  and  probably  high  estimate 
made  in  the  board  of  education's  report  of  January,  19 13.* 

Years  Annual  Cost  to  the  State 

1914-20.    From  $75,000,  increasing  to  $120,000 
1920-30.  150,000,  300,000 

1930-50.  250,000,  400,000 

Connecticut  Teachers'  Retirement  Fund.  Outside  of  an 
act  incorporating  the  Connecticut  Teachers  Annuity  Guild, 

Massachusetts   House   Docs.,   1913,   No.   1926,  p.   17. 

239 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

which  is  a  private  association,  the  only  retirement  legislation 
that  was  placed  on  the  Connecticut  statutes  up  to  the  year  1917 
were  the  acts  of  1911  allowing  the  cities  of  New  Haven  and 
New  London  to  establish  a  retirement  fund. 

In  the  year  1915  an  attempt  was  made  by  the  teachers  of 
Connecticut  to  secure  retirement  legislation  providing  for  the 
establishment  of  a  state- wide  non-contributory  retirement  sys- 
tem. No  special  fund  was  to  be  provided  for  that  purpose.  The 
state  was  to  appropriate  each  year  the  amount  necessary  for 
the  payment  of  that  year's  pensions.  The  bill  was  passed  by 
the  legislature  but  vetoed  by  the  governor  on  the  ground  of 
unconsti  tutionality . 

After  this  defeat  the  leaders  of  the  pension  movement 
dropped  the  idea  of  securing  a  non-contributory  pension  and 
framed  a  bill  following  very  closely  the  retirement  plan  estab- 
lished in  Massachusetts.  The  bill  was  introduced  in  the  legis- 
lature of  1917,  was  passed  without  considerable  opposition 
and  became  a  law  on  July  i,  1917. 

Benefits.  The  only  important  departure  from  the  Massa- 
chusetts plan  was  with  respect  to  eligibility  for  retirement. 
Under  the  Massachusetts  plan,  60  years  was  fixed  as  the 
minimum  age  for  retirement  regardless  of  length  of  service. 
In  Connecticut,  in  order  to  receive  a  retirement  allowance 
at  60  years  of  age,  the  teacher  must  have  completed  15  years 
of  service.  On  the  other  hand,  if  the  teacher  has  completed 
35  years  of  service,  he  or  she  may  retire  regardless  of  age. 
This  departure  from  the  Massachusetts  plan  is  rather  a  step 
backward  than  an  improvement.  Its  purpose  was  evidently  to 
avoid  the  opposition  of  the  teachers  who  thought  that  in  case 
of  long  service,  retirement  should  be  allowed  at  an  early  age. 

The  retirement  allowance  consists  of  two  benefits:  an 
annuity  and  a  pension.  The  annuity  is  of  such  amount  as  the 
teacher's  contribution  would  purchase,  and  the  pension  paid 
by  the  state  is  of  a  similar  amount  as  in  Massachusetts;  an 
additional  pension  is  paid  by  the  state  to  teachers  who  had 

240 


MASSACHUSETTS  AND  CONNECTICUT  FUNDS 

been  in  the  service  prior  to  the  establishment  of  the  system 
and  who  had  served  15  years  and  become  eligible  to  retire- 
ment. This  pension  is  to  be  sufficient  to  make  the  total  retire- 
ment allowance  equal  the  amount  they  would  have  received 
had  they  contributed  for  thirty  years  instead  of  only  since 
July  i,  1917. 

Disability  incurred  before  the  age  of  55  entitles  the  teacher 
merely  to  a  refund  of  his  or  her  contributions  with  compound 
interest.  After  reaching  the  age  of  55,  the  teacher  may,  in 
case  of  the  approval  of  the  retirement  board,  be  retired  under 
the  same  provisions  and  privileges  as  outlined  above  for 
service  pensions. 

The  ordinary  death  benefit,  where  death  occurs  before 
retirement,  is  only  a  refund  of  contributions  plus  compound 
interest.  Death  after  retirement  usually  results  in  the  cessa- 
tion of  the  pension,  but  it  may  not  entirely  result  in  this  way, 
for  every  teacher  has  the  right,  upon  retirement,  to  choose 
a  smaller  pension  with  the  provision  that  the  balance  shall 
be  paid  to  his  dependents  or  assignees  on  his  death  in  the 
form  of  a  lump  sum  or  a  further  pension. 

Contributions  with  compound  interest  are  refunded  to 
teachers  who  resign  or  are  dismissed  before  retirement.  Those 
who  have  taught  for  10  years  have  the  alternate  choice  of 
leaving  their  contributions  on  deposit  and  drawing  such  an 
annuity  as  their  amounts  have  purchased. 

Contributions.  The  maintenance  of  the  fund  is  practically 
the  same  as  in  Massachusetts.  The  teacher  contributes  5  per 
cent  of  salary  with  a  maximum  of  $100  and  a  minimum  of 
$15  per  year.  Payments  may  cease  after  they  have  become 
sufficient  to  buy  an  annuity  of  $500  at  age  60  or  after  they 
have  been  made  for  thirty  years.  The  state  pays  the  re- 
mainder, including  (i)  administrative  expense,  (2)  an  amount 
large  enough  to  pay  the  pensions  for  service  prior  to  July  i, 
1917,  and  (3)  the  state's  half  of  the  regular  retirement  allow- 
ance paid  to  teachers  for  service  after  the  above  date. 

241 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Management.  The  act  entrusts  the  management  of  the 
fund  to  a  retirement  board  consisting  of  the  following  five 
members : 

1.  The  state  insurance  commissioner. 

2.  The  state  bank  commissioner. 

3.  The  secretary  of  the  state  board  of  education. 

4  and  5.  Two  members  to  be  appointed  by  the  governor, 
one  to  serve  two  years  and  the  other  four  years.  Thereafter, 
the  teachers'  association  shall  elect  these  two  members  for 
overlapping  terms  of  four  years. 

While  representing  a  substantial  advance  over  the  majority 
of  the  existing  systems,  the  Connecticut  system,  like  that  of 
Massachusetts,  is  not  as  advanced  as  the  systems  of  New 
York  City  and  Pennsylvania.  The  features  which  are  open 
to  criticism,  and  which  have  been  pointed  out  in  connection 
with  the  Massachusetts  system,  are  that  the  contributions  are 
not  graduated  according  to  age,  so  that  the  benefits  in  the 
cases  other  than  those  of  average  entrants  are,  therefore, 
inadequate,  and  the  contributions  of  the  state  are  not  made 
on  a  reserve  basis.  The  lack  of  adequate  disability  provision 
is  also  a  serious  defect.  As  this  defect  in  the  original  scheme 
of  Massachusetts  has  been  remedied  by  a  subsequent  amend- 
ment it  may  be  expected  that  Connecticut  will  soon  take  a 
similar  action. 


242 


CHAPTER  XVI 
THE   NEW   YORK   CITY   FUND 

Both  on  its  historical  and  on  its  scientific  side,  the  story 
of  the  New  York  City  fund,  reorganized  in  1917  after  twenty 
years  of  a  career  apparently  prosperous  but  actually  pre- 
carious, is  of  unusual  interest. 

History  of  the  Old  Fund.  Prior  to  1901  there  were  two 
separate  teachers'  pension  funds  in  the  city  of  New  York: 
one  in  the  boroughs  of  Manhattan  and  the  Bronx,  comprising 
the  old  city  of  New  York,  established  in  1894  j1  the  other  in 
the  borough  of  Brooklyn,  established  in  1895. 2  The  income 
of  the  New  York  fund  originally  consisted  of  absence  deduc- 
tions, donations,  legacies  and  gifts;  that  of  the  Brooklyn  fund 
of  a  contribution  by  the  teachers  of  i  per  cent  of  their  salaries. 
A  new  source  of  income  was  added  to  both  funds  in  1898, 
consisting  of  5  per  cent  of  the  excise  taxes. 

The  pension  provided  by  the  New  York  fund  was  one-half 
of  the  final  salary,  not  exceeding  $1,000.  It  would  be  granted, 
however,  only  after  30  years  of  service  in  the  case  of  a 
woman,  and  35  years  in  the  case  of  a  man;  and  only  upon  the 
recommendation  of  the  city  superintendent  that  the  teacher 
was  mentally  or  physically  disabled  for  the  performance  of 
duty.  In  addition  a  two-thirds  vote  of  the  board  of  educa- 
tion was  required. 

Under  the  provisions  of  the  Brooklyn  fund,  pensions  of 
one-half  of  the  final  salary,  not  exceeding  $1,200,  were  to  be 
granted  at  the  discretion  of  the  board  of  education  to  woimen 
teachers  not  less  than  55  years  old  and  to  men  teachers  not 


York,  Acts,  1894,  ch.  796. 
2New  York,  Acts,  1895,  ch.  656. 


243 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

less  than  60  years  old,  after  a  teaching  experience  of  30  years, 
of  which  20  years  must  have  been  in  Brooklyn  schools.  No 
retirement  was  to  be  made  unless  the  teacher  had  paid  into 
the  fund  20  per  cent  of  the  last  annual  salary  before  retire- 
ment. 

The  two  funds  were  merged  in  1901*  and  the  provision  for 
an  income  from  unrefunded  absence  deductions,  contained  in 
the  old  New  York  scheme,  was  also  applied  to  the  Brooklyn 
teachers,  while  the  requirement  of  a  contribution  of  I  per 
cent  of  salaries,  which  had  obtained  in  the  Brooklyn  system, 
was  dropped.  The  revenues  of  the  fund  were  again  increased 
in  1905  by  a  provision  that  the  contribution  of  I  per  cent 
from  salaries  should  apply  to  all  teachers  in  New  York  and 
Brooklyn. 

The  law  consolidating  the  funds  also  enlarged  their  benefits. 
Under  the  new  law,  a  disability  pension  after  30  years  of 
service  (20  in  New  York  City)  was  allowed  at  one-half  of 
the  salary  received  at  the  date  of  retirement,  with  a  minimum 
of  $600  and  a  maximum  of  $1,000  for  teachers,  $1,500  for 
principals  and  $2,000  for  supervising  officials.  A  pension 
of  like  amount  was  permitted  at  65  years  of  age,  after  30 
years'  service  (20  in  New  York  City).  The  granting  of  a 
disability  pension  required  the  recommendation  of  the  city 
superintendent  and  a  two-thirds  vote  of  the  board  of  educa- 
tion. There  was  no  such  requirement  for  the  "age  65" 
pension. 

The  small  disbursements  from  the  fund  naturally  resulted 
in  a  favorable  balance  during  the  earlier  years  and  created 
an  impression  of  prosperity.  During  this  accumulative  stage 
the  receipts,  disbursements,  annual  surplus  and  total  balance 
of  the  fund  were  as  follows : 

Annual  Annual  Annual  Surplus 

Year  Receipts  Disbursements       (Excess  of  Receipts  Capital 

Over  Disbursements) 

1895        $66,688       $16,425       $50,263        $75,324 

1900  469,484         277,015          192,468  817,576 

1905  738,106         664,258  73,847          1,298,215 

1909  963,840         956,905  6,984          1,626,077 

JNew  York,  Acts,  1901,  ch.  466. 

244 


THE  NEW  YORK  CITY  FUND 

The  fund,  as  thus  indicated,  increased  steadily  during  the 
first  fourteen  years.  On  December  31,  1909,  it  had  to  its 
credit  an  accumulated  reserve  of  more  than  $1,600,000.  The 
next  year,  however,  the  fund  reached  its  crisis.  The  disburse- 
ments overtook  and  exceeded  the  revenues,  causing  the  first 
deficiency  to  appear.  Then  the  fund  began  rapidly  to  decline. 
The  annual  disbursements  were  now  running  above  a  million 
dollars.  The  annual  deficiencies  became  heavier ;  the  fund  was 
increasingly  forced  to  draw  upon  the  reserve  accumulated  dur- 
ing the  first  fourteen  years.  It  took  just  five  years  to  exhaust 
it  completely.  The  decline  of  the  capital  is  shown  in  the  fol- 
lowing table : 

Annual  Annual  Annual 

Year                          Receipts  Disbursements  Deficiency  Capital 

IQIO  $1,078,806  $1,107,918  $29,111  $1,596,965 

1911  1,099,039  I,l8l,6oO  82,561  1,514,404 

1912  1.168,297  1,305,438  137,141  1,377,263 

1913  1,183,598  1,465,607  282,008  1,095,255 

1914  1,088,658  1,201,312  112,653  982,601 

1915  1,060,679  1,214,298  I53,6l9  828,982 

Unsuccessful  Attempts  at  Reorganization.  In  order  to 
check  the  rapid  decline  of  the  fund,  the  board  of  retirement 
adopted  several  measures,  which,  however,  failed  to  postpone 
for  any  considerable  time  the  day  of  collapse.  In  September, 
1913,  the  refunding  from  the  fund  of  deductions  for  absences 
subsequently  excused  was  discontinued.  When  this  proved 
ineffective,  the  board  of  retirement  resolved  on  February  I, 
1915  to  cease  granting  new  retirements.  Some  of  the  appli- 
cants were  continued  in  the  service,  others  were  granted  leave 
of  absence  by  the  board  of  education  for  a  year  on  half  pay. 
A  serious  controversy,  however,  arose  between  the  board  of 
education  and  the  comptroller  of  the  city  of  New  York  over 
the  validity  of  this  action,  and  much  hardship  ensued  for  those 
teachers  whose  salaries  were  held  up.  Some  of  those  who 
were  granted  leave  of  absence  returned  to  active  service 
although  they  were  unable  to  do  their  work.1 

Another  expedient  resorted  to  in  1913,  1914  and  1915  was 

1Seventh  Report  of  the  Board  of  Retirement,  1915,  p.  18. 

245 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

that  of  borrowing  the  next  year's  excise  taxes.  The  fund 
still  had  a  capital  amounting  to  about  $828,000,  but  the  law 
allowed  the  use  only  of  the  interest  on  the  permanent  capital 
of  $800,000.  Finally,  in  April,  1916,  the  legislature  passed  a 
new  law  permitting  the  fund  to  draw  on  the  capital  until 
reduced  to  $500,000.  Had  not  this  measure  been  adopted  the 
fund  would  have  been  unable  to  make  its  next  monthly  pay- 
ments. 

An  actuarial  investigation  made  in  191 51  showed  that  if 
the  existing  provisions  of  the  fund  were  continued,  the  annual 
pension  expenditure  would  continue  to  increase  until  it 
amounted  to  more  than  20  per  cent  of  the  payroll;  and  that 
to  be  solvent  on  a  strictly  reserve  basis,  the  fund  would  have 
to  provide  for  a  tremendous  deficiency  of  almost  fifty-five 
million  dollars. 

The  Bill  of  1916.  As  early  as  1910  there  had  been  heard 
demands  for  a  reorganization  of  the  fund  on  a  sound  basis, 
and  these  had  been  enforced  by  an  official  report  made  in 
I9I2;1  but  it  was  not  until  1915  that  reorganization  became 
a  live  question. 

In  1913  the  New  York  Bureau  of  Municipal  Research  had 
conducted  for  an  aldermanic  committee  an  investigation  of 
the  police  pension  fund,  the  annual  deficiencies  of  which 
amounted  to  more  than  a  million  dollars.  It  published  an 
exhaustive  report  in  which  it  set  forth  "scientific  conclusions 
reached  that  may  serve  as  a  basis  for  intelligent  consideration 
of  pension  plans  for  employees  in  other  branches  of  the  serv- 
ice."2 As  a  result  of  this  report  a  commission  on  pensions 
was  appointed  by  the  mayor  to  investigate  all  the  nine  pension 

xNew  York  (City)  Commission  on  Pensions.  Report  on  the  Teachers' 
Retirement  Fund,  1915,  p.  10. 

2Hutcheson,  W.  A.  Report  by  actuary  upon  the  condition  of  the 
New  York  public  school  teachers'  retirement  fund.  (In  New  York  City 
Board  of  Education,  sixth  annual  report  of  the  secretary  of  the  Board  of 
Retirement,  1913.) 

8New  York  Bureau  of  Municipal  Research.  Report  on  the  Police 
Pension  Fund  of  the  City  of  New  York,  1913,  p.  n. 

246 


THE  NEW  YORK  CITY  FUND 

funds  of  the  city  and  to  prepare  a  plan  for  the  reorganiza- 
tion of  the  fund. 

The  commission  had  made  but  little  progress  on  the  com- 
prehensive program  which  it  had  laid  out  when  it  was  urged 
to  set  aside  all  other  work  and  devote  its  attention  to  the 
teachers'  retirement  fund,  the  bankruptcy  of  which  had  now 
become  manifest.  The  difficulties  in  the  way  of  formulating 
an  equitable  and  financially  sound  permanent  system  were,  as 
always,  many  and  grave.  There  was,  however,  the  additional 
danger  that  such  a  plan  might  not  be  in  accord  with  the  gen- 
eral policy  to  be  decided  upon  later  for  the  city's  employees 
generally,  and  might  impose  upon  the  city  a  larger  proportion 
of  cost  for  one  group  of  employees  than  for  the  other  groups. 

In  spite  of  these  difficulties  and  the  limited  time  available, 
the  commission  prepared  and  published  its  report  in  January, 
I9I6.1  In  submitting  it,  the  chairman  of  the  commission 
wrote : 

In  this  report  *  *  *  following  good  practice  elsewhere, 
and  guided  by  past  mistakes  of  New  York  City  in  dealing 
with  pension  problems,  a  proposal  is  made  to  organize  a  retire- 
ment system  which  will  be  free,  on  the  one  hand,  of  uncer- 
tainties and,  on  the  other,  will  provide  a  means  just  to  em- 
ployees and  taxpayers  alike  for  its  financing.  It  is  by  no 
means  maintained  that  the  conclusions  set  forth  in  the  report 
are  final.  They  are  presented  with  a  view  to  complete  dis- 
cussion and  with  the  expectation  that  they  will  be  changed 
in  the  light  of  fuller  wisdom  and  possibly  more  mature  thought 
which  this  discussion  will  produce.  Whatever  may  be  the 
judgment  on  the  recommendations,  the  facts  are  plainly  told 
so  that  there  is  provided  a  complete  basis  for  considering  the 
two  major  questions  involved  in  the  problem:  First,  what 
shall  be  the  conditions  of  retirement?  Second,  how  shall  the 
cost  of  meeting  these  conditions  be  provided?  *  *  * 

It  is  conceivable,  of  course,  that  the  cost  of  the  entire  pen- 
sion plan  may  be  levied  upon  the  teachers  themselves.  But 
to  do  so  would  mean  either  to  cut  down  the  benefits  below  a 

lNew  York  (City)  Commission  on  Pensions.  Report  on  the  Teachers' 
Retirement  Fund,  1916,  p.  i. 

247 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

point  where  they  would  seem  adequate  to  furnish  a  proper 
basis  of  retirement,  or  to  impose  an  intolerable  burden  upon 
the  teaching  force.  Similarly,  it  is  conceivable  that  the  entire 
cost  might  be  laid  upon  the  city.  But  if  this  were  done,  the 
burden  on  taxpayers  would  be  so  great  that  protest  would  be 
surely  evoked,  and  either  reduction  or  complete  stoppage  of 
benefits  would  follow.  The  middle  course  of  equal  division 
of  cost  is  suggested  with  the  adequate  safeguard  of  the  inter- 
est of  the  teachers  that  in  case  they  withdraw  from  the  service 
prior  to  retirement  their  contributions  shall  be  returned  to 
them  with  compound  interest. 

The  report  made  the  following  tentative  recommendations: 

1.  The  present  law  should  be  repealed  and  a  new  law  passed 
which  will  deal  more  exhaustively  with  all  details  of  pro- 
visions than  the  present  law,  and  will  eliminate  as  much  as 
possible  the  exercise  of  administrative  discretion. 

2.  The    administration    and    interpretation    of    the    law 
should  be  entrusted  to  a  board  independent  of  the  Board  of 
Education  and  composed  of   members  administratively  and 
technically   qualified   for   the  efficient  performance   of   their 
duties.     In  such  board  the  Department  of  Education  should 
be  represented. 

3.  The  liability  to  present  pensioners  should  be  reduced. 

(a)  By  a  revision  of  the  entire  list. 

(b)  By  the  revocation  of  pensions  to  disability  pension- 
ers no  longer  disabled. 

(c)  By  the  return  to  duty  of  existing  disability  pension- 
ers who  are  cured  of  their  disabilities  and  of  service 
pensioners  who  are  not  superannuated  or  otherwise 
disabled. 

(d)  By  a  readjustment  of  pension  benefits  in  accordance 
with  the  scale  suggested  for  the  retirement  of  future 
beneficiaries. 

4.  The   fund's   liability    for   future    pensions    to    teachers 
now  in  the  service  should  be  reduced.     A  change  of  existing 
provisions  by  the  introduction  of  a  minimum  age  limit  for 
retirement  and  other  details  discussed  in  this  report  will  mate- 
rially reduce  the  fund's  present  liability. 

5.  The  future  contributions  of  teachers  now  in  the  service 
should  be  increased  to  cover: 

248 


THE  NEW  YORK  CITY  FUND 

(a)  One-half  of  the  cost  of  benefits  accruing  for  services 
subsequent  to  the  reorganization  of  the  scheme,  and 

(b)  One-half  of  the  cost  of  benefits  accruing  for  services 
prior  to  the  reorganization  of  the  scheme,  except 
when   the   total   annual   contribution   of   individual 
teachers  would  exceed  8  per  cent  of  salary. 

The  scale  of  contributions  will  vary  according  to  present 
age  and  number  of  years  of  past  service,  and  should,  as  a 
matter  of  expediency,  be  limited  to  a  maximum  of  8  per  cent 
of  salaries  in  case  of  individual  teachers.  The  contributions 
of  teachers  should  be  made  returnable  with  compound  interest 
at  4  per  cent  upon  separation  from  service  prior  to  retirement. 

6.  Teachers    entering    the    service    after    reorganisation 
should  be  made  eligible  to  retirement  under  the  same  pension 
provisions  as  are  proposed  for  teachers  now  in  the  service. 
Their  contributions  should  cover  one-half  of  the  cost  of  their 
benefits.     Since  there  are  no  arrears  to  be  made  good,  the 
contributions  of  new  entrants  into  the  system  will  be  much 
smaller  than  those  of  teachers  who  are  nearing  the  period 
of  retirement. 

7.  The  city  should  contribute  annually  a  percentage   of 
salaries  of  teachers  sufficient  to  cover  one-half  of  the  cost 
of  benefits  accruing  because  of  services  subsequent  to   the 
reorganisation   of   the   scheme.      Such   contributions   should 
not  be  available  to  employees  leaving  the  service  prior  to 
retirement. 

8.  The  city  should  contribute  a  uniform  amount  annually 
for  the  next  60  years  to  liquidate : 

(a)  The  fund's  liability  remaining  for  pensions  on  the 
roll  at  the  time  of  reorganization  of  the  scheme  after 
the  list  of  pensioners  has  been  revised  as  recom- 
mended. 

(b)  The  fund's  liability  remaining  for  future  pensions 
on  account  of  services  of  present  teachers  prior  to 
reorganization  after  change  in  benefit  provisions  has 
been  made  and  the  future  contributions  of  teachers 
have  been  increased  to  cover  back  services. 

9.  The  assets  and  liabilities  should  be  appraised  periodically, 
and  necessary  adjustments  made  in  all  three  contributions. 

At  about  the  same  time  that  the  commission  published  its 

249 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

report,  a  committee  appointed  by  the  Federation  of  Teachers' 
Associations  published  a  pension  plan  which  differed  funda- 
mentally from  the  city  plan.  The  rates  of  contributions  and 
benefits  were  fixed  more  or  less  arbitrarily  without  actuarial 
calculations,  the  committee  being  of  the  opinion  that  no 
actuarial  advice  was  necessary.  The  plan  was  unsound  but 
contained  features  which  made  it  popular  with  the  teachers — 
low  contributions,  retirement  after  30  years  of  service,  and  a 
pension  of  one-sixtieth  of  salary  for  each  year  of  service. 

The  criticism  of  the  teachers  was  particularly  directed 
against  the  recommendation  of  the  report  that  regardless  of 
length  of  service  no  teacher  should  be  retired  on  a  pension 
before  65  years  of  age,  unless  disabled.  It  was  urged  that 
a  teacher  who  entered  the  service  at  20  and  was  compelled 
to  serve  45  years  before  becoming  entitled  to  a  pension  would 
be  worn  out  long  before  retirement  and  that  such  a  late 
pension  would,  therefore,  be  of  little  value  to  the  teacher  or 
to  the  schools. 

Early  in  1916  conferences  were  held  between  representa- 
tives of  the  commission  and  of  the  teachers.  As  a  result  of 
these  conferences,  the  city  yielded  as  to  the  age  condition  and 
the  teachers  as  to  length  of  service.  They  agreed  that  retire- 
ment should  take  place  either  after  65  years  of  age,  regardless 
of  length  of  service,  or  after  35  years  of  service,  regardless 
of  age.  With  respect  to  the  amount  of  pension,  the  scale  of 
one-seventieth  of  salary  was  agreed  upon  in  place  of  the  one- 
eightieth  provided  in  the  city  plan,  and  one-sixtieth  in  the 
teachers'  plan.  An  agreement  was  also  reached  on  the  ques- 
tion of  dividing  the  cost  equally,  except  that  the  city  was  to 
assume  the  entire  burden  with  respect  to  pensioners  already 
retired,  and  the  major  part  in  case  of  the  older  present 
teachers.  A  compromise  bill  was  prepared  which  provided 
that  in  the  event  of  resignation,  dismissal  or  death,  the  mem- 
ber's contributions  together  with  interest  were  to  be  refunded 
to  him  or  to  his  dependents,  and  that  the  actuarial  equivalent 

250 


THE  NEW  YORK  CITY  FUND 

of  the  pension  could  be  taken  in  the  form  of  various  optional 
benefits.  The  contributions  of  the  teachers  were  to  be  funded 
on  an  actuarial  reserve  basis  and  were  guaranteed  to  earn 
interest  compounded  at  4  per  cent.  Their  amount  was  actu- 
arially  calculated,  expressed  as  a  percentage  of  salary,  and 
so  graded  according  to  age  and  sex  that  every  teacher  would 
contribute  about  one-half  of  the  cost  of  his  retirement  benefit 
with  such  limitation,  however,  that  his  contribution  could  in 
no  case  exceed  8  per  cent  of  salary.  An  important  option  was 
given  the  teachers  by  which  they  could  reduce  their  contri- 
bution to  5  per  cent,  thereby  proportionately  reducing  their 
annuity.  The  city  was  to  pay — 

1 i )  the  entire  pension  roll  of  all  the  teachers  already  retired 
(about  1,400  persons) 

(2)  one-half  of  the  cost  of  providing  for  retirement  of  the 
present  teaching   force   plus  the  additional   share  in 
excess  of  the  teachers'  8  per  cent  contributions.     The 
payment  was  to  be  made  on  a  cash  disbursement  basis, 
the  city  appropriating  each  year  for  each  pension  fall- 
ing due  an  amount  which  together  with  the  amount 
purchased  by  the  teachers'  own  contributions  would 
equal  one-seventieth  of  his  average  salary  for  each  year 
of  service. 

(3)  yearly  contributions  sufficient  to  accumulate  a  reserve 
fund   from  which   to  pay  half   the  pension   of  new 
entrants.     In  the  latter  case  the  city  was  to  match 
their  contributions  dollar  per  dollar. 

(4)  the  cost  of  administering  the  fund. 

The  history  of  the  spirited  contest  which  was  waged  around 
the  reorganization  bill  will  repay  the  close  study  of  one  inter- 
ested in  the  human  and  psychological  factors  which  may  so 
complicate  the  attempt  to  reorganize  a  pension  system  on  a 
scientific  basis.  Behind  the  proposed  bill  stood  the  city  admin- 
istration, represented  by  the  pension  commission,  and,  as 
already  seen,  the  Federation  of  Teachers'  Associations. 
Opposed  to  it  were  large  groups  of  teachers,  actuated  by  vary- 
ing interests  in  and  objections  to  the  plan,  who  had  organized 

251 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

a  Teachers'  Pension  Association  to  defeat  the  bill.  The 
conflict  between  these  two  organizations,  each  claiming  to 
represent  the  prevailing  sentiment  of  the  teachers,  injected  an 
element  of  bitterness  into  the  contest  and  made  easy  the  intro- 
duction of  irrelevant  and  confusing  issues. 

That  the  plan  had  provoked  opposition  from  large  numbers 
of  teachers  was  not  indeed  surprising.  Many  teachers  were 
strongly  opposed  to  having  their  contributions  increased  from 
I  per  cent  under  the  old  unsound  system  to  from  4  to  8  per 
cent  under  the  proposed  system.  The  pension  association 
argued  that  even  "the  lowest  of  these  rates  is  extremely  exces- 
sive);" and  it  was  indeed  frequently  alleged,  quite  incorrectly, 
that  "nowhere  in  the  world  are  such  high  contributions  re- 
quired."1 

Out  of  this  opposition  to  an  increase  in  the  contributions 
there  were  revived  the  familiar  and  time-honored  arguments 
against  compulsory  participation  in  a  pension  fund ;  and  much 
was  made,  too,  of  the  natural  opposition  of  the  younger  teachers 
to  those  features  of  the  plan  which  seemed  to  favor  the  older 
teachers — the  assumption  by  the  city  of  all  contributions,  in 
excess  of  8  per  cent  of  salary,  required  for  making  up  the 
deficiency  of  the  existing  fund,  and  the  grading  of  pensions 
according  to  salary.  It  was  urged  that  teachers,  principals 
and  superintendents  should  all  be  provided  with  a  "flat  pen- 
sion" of  $750  irrespective  of  their  salaries;  that  $750  was 

1  The  rates  of  contributions  in  many  of  the  teachers'  pension  systems 
abroad  are  even  higher  than  those  proposed,  as  indicated  in  the  following 
table,  which  was  published  by  the  Federation  of  Teachers'  Associations 
at  the  time : 

Percentage  of  Salary  Contributed  by 

Country  Contributed  by  Teachers  Government 

Russia  6  6  per  cent  of  salary 

France  5  Balance  of  cost 

Austria  3.8  Balance  of  cost 

Italy  5  6  per  cent  of  salary 

Spain  4  Balance  of  cost 

Belgium  3  5-5  per  cent  of  salary 

Scotland  4  6  per  cent  of  salary 

Netherlands  7  Balance  of  cost 

Greece  9  Balance  of  cost 

New  Zealand  5  to  10               Balance  of  cost 

252 


THE  NEW  YORK  CITY  FUND 

sufficient  for  any  teacher  to  live  upon,  and  that  the  men  who 
were  receiving  large  salaries  ought  to  have  saved  enough  to 
eke  out  whatever  they  received  from  the  city.  Indeed  that 
the  very  basis  of  the  whole  plan  was  a  refunding  to  the 
teacher  of  his  or  her  own  contributions  was  itself  made  an 
object  of  attack.  The  right  of  all  citizens,  including  teachers, 
to  invest  their  money  as  they  saw  fit  was  repeatedly  empha- 
sized. The  insurance  features  of  the  plan  were  likewise  de- 
nounced as  constituting  an  unjustifiable  venture  of  the  city 
into  the  insurance  business. 

Undoubtedly,  also,  one  of  the  factors  of  the  opposition 
was  the  general  discontent  among  the  teachers  because  of 
other  grievances  against  the  city  administration.  Side  issues 
were  brought  into  the  discussion  which  had  nothing  to  do  with 
pensions  and  which  tended  further  to  confuse  the  minds  of 
the  teachers.  Thus,  in  one  of  the  leaflets  prepared  by  the 
Teachers'  Pension  Association,  it  was  pointed  out  that  "the 
city  on  the  plea  of  economy  is  denying  promotion  to  nearly 
1,000  teachers  and  is  keeping  several  hundred  persons  from 
appointment  to  the  system.  Why  do  they  claim  they  are  will- 
ing to  pay  so  much  for  pensions?" 

While  the  bill  was  before  the  legislative  committees,  a 
referendum  vote  of  the  teachers  was  taken  which  showed 
that  11,000  were  opposed  to  the  measure  with  8,000  in  its 
favor.  The  minority,  however,  urged  that  in  a  matter  of  such 
a  technical  character  the  controlling  weight  should  be  given 
to  the  opinion  of  the  actuaries  and  other  experts. 

Shortly  before  the  bill  came  to  a  vote  the  president  of  the 
board  of  education,  Mr.  William  G.  Willcox,  issued  a  state- 
ment which  so  admirably  summarizes  the  situation  as  to  war- 
rant reproduction  here:1 

Teachers  who  are  opposing  the  proposed  pension  legislation 
are  assuming  a  grave  responsibility.  Although  the  measure 
has  been  approved  and  endorsed  by  the  pension  commission,  by 

1Evening  Telegram,  New  York,  April  4,  1916. 

253 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  city  administration,  by  the  unanimous  vote  of  the  board  of 
education,  and  by  a  large  majority  of  the  teaching  and  super- 
vising staff,  it  is  quite  possible  that  an  active  minority  of  the 
teachers  may  defeat  it.  If  so,  they  will  be  responsible  for 
much  hardship  and  distress  among  hundreds  of  teachers  who 
have  been  or  should  be  retired.  If  the  opposition  were  the 
result  of  careful  study  of  the  measure,  it  would  be  less  open 
to  criticism,  but  it  is  apparently  based  upon  misunderstanding 
and  ignorance,  for  as  the  provisions  of  the  bill  are  explained 
the  opponents  rapidly  become  advocates. 

The  measure  does  not  deprive  any  teacher  of  a  single  dollar 
of  salary.  It  does  provide  for  the  compulsory  saving  of  about 
five  per  cent  of  the  salary,  but  under  no  circumstances  can 
these  savings  be  lost  to  the  teacher.  If  a  teacher  dies  in  the 
service  or  leaves  the  service  for  any  cause  without  retirement, 
the  accumulated  deductions  with  four  per  cent  are  refunded. 
If  a  teacher  is  retired  the  accumulated  savings  are  doubled 
by  the  city  to  provide  the  stipulated  annuity.  As  the  eight 
per  cent  deduction  provided  for  the  teachers  nearing  the  retir- 
ing age  may  be  reduced  to  five  per  cent  with  a  corresponding 
reduction  in  the  annuity,  no  teacher  is  really  compelled  to 
save  more  than  five  per  cent.  Even  upon  actual  retirement 
any  teacher  may  elect  to  decline  the  annuity  and  withdraw 
accumulated  savings  instead. 

Is  it,  then,  unfair  or  unreasonable  that  a  teacher  should 
be  obliged  to  put  by  five  per  cent  of  the  annual  salary  as  a 
provision  for  old  age?  Certainly  everyone  dependent  upon  a 
salary  should  save  as  much  as  five  per  cent  each  year,  and  even 
with  this  deduction  the  remaining  salary  for  women  teachers 
will  be  considerably  more  than  they  received  before  the  equal 
pay  law  was  passed.  If  teachers  were  asked  to  contribute  five 
per  cent  to  pay  annuities  of  other  teachers,  they  might  reason- 
ably object,  but  is  any  teacher  justified  in  opposing  this  liberal 
and  humane  provision  for  sick  and  disabled  teachers  and  forc- 
ing the  continuance  of  a  situation  of  misery  to  these  poor 
teachers  and  of  detriment  to  the  schools,  merely  to  avoid  sav- 
ing five  per  cent  of  his  salary,  which  will  be  as  safe  as  if 
deposited  in  a  savings  bank,  and  which  will  be  refunded  with 
four  per  cent  interest  unless  he  himself  elects  to  use  it  for  his 
own  annuity? 

No  plan  could  possibly  be  devised  on  which  all  would  agree, 

254 


THE  NEW  YORK  CITY  FUND 

or  which  would  not  cause  some  inconvenience  or  perhaps 
hardship  in  individual  cases,  but  in  a  situation  in  which  the 
teachers  must  apparently  get  together  or  get  nothing  the 
minority  should  seriously  consider  their  position  before  assum- 
ing responsibility  for  the  defeat  of  this  most  liberal  and  be- 
neficent measure. 

The  bill  was  favorably  reported  from  committee,  but,  after 
debates  attended  by  much  excitement  and  considerable  dis- 
order, failed  of  passage  by  four  votes. 

The  Enactment  of  the  Reorganization  Law  of  1917. 
After  the  defeat  of  the  bill  of  1916  the  pension  commission 
and  the  teachers'  federation  took  steps  together  to  prepare 
a  new  bill.  After  a  considerable  study  a  great  number  of  new 
features  were  added  of  which  the  most  important  were:  (i) 
a  clear  distinction  between  the  "annuity"  purchased  by  the 
teachers'  contributions  and  the  "pension"  supplied  by  the  city; 
(2)  a  provision  by  which  a  teacher  might  reduce  his  contri- 
butions (thereby  reducing  his  "annuity")  without  reducing 
the  "pension"  supplied  by  the  city;  (3)  abolition  of  direct 
relationship  between  annuity  and  salary,  thereby  preventing 
those  who  advance  rapidly  from  obtaining  greater  benefits  at 
the  expense  of  those  who  advance  slowly. 

To  avert  repetition  of  the  accusation  that  the  teachers  had 
no  opportunity  to  consider  the  proposed  pension  measure,  Mr. 
Willcox  ordered  the  teachers  to  appoint  three  delegates  from 
the  schools  who  were  to  constitute  a  central  pension  com- 
mittee. This  committee,  consisting  of  150  teachers,  was  to 
"express  to  the  city  pension  commission  the  views  and  criti- 
cisms of  the  teachers,  and  to  convey  to  the  teachers  accurate 
information  regarding  the  provisions  of  the  proposed  pension 
plan." 

The  teachers'  "Committee  of  150"  was  divided  between  a 
minority  which  favored  the  measure,  and  a  majority  which 
urged  three  principal  objections  to  it.  The  majority  urged 
in  the  first  place  that  the  city  should  not  be  permitted  to 

255 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

require  from  the  teachers  already  in  the  service  a  contribution 
larger  than  3  per  cent  of  salary,  but  that  it  should  guarantee 
each  teacher  a  half  salary  benefit.  To  this  the  city  objected 
on  the  ground  that  it  would  impose  upon  it  an  additional 
liability  of  five  million  dollars,  that  it  would  lead  to  a  similar 
claim  on  the  part  of  new  entrants,  and  would  be  against  the 
fundamental  principle  of  cooperative  division  of  cost. 

In  the  second  place  the  majority  opposed  the  city's  grant- 
ing pensions  above  $2,000.  This  objection  was  rooted  in  the 
antagonistic  attitude  which  the  lower  paid  classes  usually 
develop  towards  the  higher  paid  officials.  To  this  the  city's 
representatives  replied  that  a  pension  of  $2,000  would  not 
be  sufficient  for  the  superannuated  superintendents,  and  that 
unless  they  were  to  receive  a  pension  proportional  to  their 
salary,  they  would  have  to  remain  in  the  service  and  by  so  do- 
ing would  block  promotions  and  thus  prove  more  harmful  to 
the  efficiency  of  service  than  the  continuance  of  an  ordinary 
grade  teacher,  and  that  the  number  of  higher  pensions  would 
be  so  insignificant  as  to  make  almost  no  difference  in  the  rest 
of  the  system. 

Thirdly,  objection  was  made  that  the  partial  reserve  with 
which  the  system  was  to  begin  was  inadequate  and  that  the 
growth  of  necessary  budget  appropriations  would,  therefore, 
become  so  great  as  to  endanger  the  permanency  of  the  fund. 
In  reply  to  this  the  city  asserted  that  since  the  passage  of 
the  proposed  law  was  requested  by  the  city  (thus  differing 
from  the  old  law  which  was  enacted  at  the  request  of  the 
teachers),  and  since  it  would  voluntarily  assume  the  financial 
obligations  involved  in  it,  it  was  hardly  conceivable  that  any 
future  legislature  would  consent  to  repeal  the  law.  It  was 
also  pointed  out  that  the  heavy  cost  of  the  first  few  years 
would  be  due  entirely  to  the  initial  payments  for  liabilities 
incurred  by  past  services  and  after  a  few  years  would  decline 
rapidly  and  become  normal. 

After  a  number  of  conferences,  the  city  refused  to  make 

256 


THE  NEW  YORK  CITY  FUND 

concession  on  any  of  these  points  or  to  further  delay  the 
matter,  and  the  city's  pension  bill  was  accordingly  introduced 
at  Albany.  As  the  work  for  which  the  committee  of  150  was 
created  was  thus  completed,  the  committee  disbanded.1 

As  soon  as  the  committee  disbanded,  the  majority  of  the 
committee  which  was  opposed  to  the  city's  pension  measure 
effected  a  permanent  organization  known  as  the  Teachers' 
Interests  Organization,  the  purpose  of  which  for  the  time 
being  was  to  defeat  the  city's  pension  bill  and  "to  secure 
pension  legislation  satisfactory  to  a  majority  of  the  teachers." 
Various  committees  were  appointed  and  a  feverish  activity 
started,  funds  were  collected,  mass  meetings  arranged,  and 
delegations  to  attend  the  hearings  at  Albany  appointed. 

The  teachers  were  now  as  hopelessly  divided  as  the  year 
before.  The  same  spirit  and  substantially  the  same  arguments 
prevailed.  The  opponents  of  the  bill  maintained  that  no 
pension  bill  should  be  passed  which  did  not  receive  the  approval 
of  the  majority  of  the  teachers.  Knowing  that  the  majority 
consisted  of  younger  teachers  who  were  not  interested  in 
pension  measures,  except  that  they  were  opposed  to  an 
increase  of  their  contributions,  they  again  demanded  that  an 
official  referendum  should  be  taken  among  the  teachers,  the 
results  of  which  should  be  binding  upon  the  legislature.  But 
the  legislative  committee  stated  that  the  results  of  a  teacher's 
referendum  cannot  bind  the  legislature  and  that  they  "will 

1The  disbandment  of  the  committee  was  precipitated  by  a  letter  from 
the  president  of  the  board  of  education  in  which  he  stated  in  part :  "I  must 
confess  that  I  am  greatly  disappointed  in  the  results  of  the  committee 
as  a  whole.  Not  only  has  it  shown  little  capacity  as  a  whole  for  con- 
structive work  or  constructive  criticism,  but  it  has  failed  to  assume  and 
maintain  the  impartial  and  fair-minded  attitude  which  is  the  first  requisite 
for  the  usefulness  and  success  of  such  a  committee.  I  have  devoted  much 
time  and  effort  to  a  sincere  attempt  to  give  the  teaching  staff  fair  repre- 
sentation in  the  consideration  of  the  pension  problem  and  to  give  the 
committee  every  opportunity  to  discharge  its  trust  with  credit  to  itself 
and  benefit  to  the  teaching  staff,  but  the  attitude  of  the  committee  has  not 
been  such  as  to  command  confidence  in  its  desire  or  purpose  to  promote 
a  fair  and  intelligent  judgment  on  the  merits  of  the  proposed  plan  and 
I  have  reluctantly  been  forced  to  the  conclusion,  therefore,  that  th« 
experiment  must  be  considered  a  failure." 

257 


consider  the  interests  of  all  citizens,  and  not  only  the  teachers 
in  that  matter."  In  view  of  this  opinion  the  board  of  educa- 
tion refused  to  order  a  new  referendum. 

In  addition  to  the  arguments  already  discussed  a  number 
of  others  were  presented.  It  was  argued  that  the  bill  substan- 
tially reduced  salaries,  as  an  increase  of  the  teachers'  contri- 
butions was  tantamount  to  a  reduction  of  salary;  that  by 
agreeing  to  meet  the  city  on  the  basis  of  a  maximum  contribu- 
tion of  3  per  cent  the  teachers  were  really  doing  more  than 
they  should  have  done,  and  that  a  higher  increase  of  their 
contribution  was  outrageous,  especially  in  view  of  the  fact 
that  the  cost  of  living  had  increased  tremendously;  that  the 
bill  made  the  women  contribute  at  a  higher  rate,  "which  is 
inequitable,  for  it  cannot  be  true  that  women  live  longer  than 
the  men  ;!>1  and  that  "the  policy  of  arbitrarily  subtracting  from 
the  pay  of  an  employee  money  for  this  purpose  is  unconsti- 
tutional."2 

At  the  hearings  held  by  the  legislative  committees  numerous 
associations  of  taxpayers  appeared  in  opposition  to  the  meas- 
ure. They  maintained  that  it  would  bankrupt  the  real  estate 
interests,  that  there  was  no  reason  for  pensioning  teachers, 
and  that  there  was  no  obligation  upon  the  city  to  carry  even 
the  present  pension  roll.  They  characterized  the  measure  as 
socialistic. 

After  a  heated  contest  the  bill  passed  both  houses  of  the 

'In  a  letter  to  the  editor  of  the  Globe  (April  16,  1914)  a  school  teacher 
wrote  in  part:  "The  women  are  nervous  wrecks  now  (ask  any  doctor) 
owing  to  all  the  new  and  extra  work  for  years  that  has  been  heaped  upon 
their  shoulders.  Who  says  they'll  live  longer  than  better  paid  men 
teachers,  under  such  crushing  and  overcrowded  conditions?  Prove  it." 

'The  president  of  the  Professional  Elementary  Teachers'  Association 
wrote  in  the  Globe  of  April  5:  "The  greatest  and  main  objection  is  that 
it  is  applying  to  an  exaggerated  degree  a  principle  the  constitutionality 
of  which  is  beginning  to  be  seriously  questioned.  That  principle  is  the 
right  of  any  legislature,  civic  authority  or  corporation  deliberately  to 
take  from  the  salary  or  wage  of  any  employee  any  portion  of  that  salary 
or  wage  for  annuity  purposes  without  that  employee's  consent.  I  have 
the  opinion  of  a  United  States  senator  who  states  that  this  policy  of 
arbitrarily  subtracting  from  the  pay  of  an  employee  money  for  this 
purpose  is  "unconstitutional."  (Globe,  April  5.) 

258 


THE  NEW  YORK  CITY  FUND 

legislature  and  came  before  the  mayor  of  the  city  of  New 
York  for  his  acceptance  on  behalf  of  the  city.  He  accepted  it 
and  it  then  went  before  the  governor.  A  last  desperate 
attempt  was  made  by  the  opponents  of  the  bill  to  induce  the 
governor  to  veto  it.  In  this  campaign  the  political  opposition 
to  the  mayor,  of  which  the  opponents  of  the  bill  had  unfortu- 
nately permitted  themselves  to  make  use,  showed  itself  more 
clearly  than  in  any  of  the  preceding  stages  of  the  contest.1 
On  May  I,  1917,  the  governor  signed  the  measure  and  it 
became  immediately  effective. 

The  opposition  movement,  however,  was  not  silenced  by 
this  defeat.  Its  leaders  urged  the  teachers  to  "allow  no  one 
on  the  Retiring  Board  who  did  not  oppose  the  bill."2  The 
schools  were  to  elect  delegates  who,  in  turn,  would  elect  the 
three  members  of  the  retirement  board.  The  opponents  suc- 
ceeded in  the  election  of  twenty-four  of  their  delegates  as 
against  twenty-two  of  the  supporters  of  the  act.  This  slight 
majority  was  sufficient  to  give  the  opponents  all  three  seats 
in  the  retirement  board  and  to  leave  the  advocates  of  the  meas- 
ure without  any  representation  in  the  management  of  the 
system. 

Provisions  of  the  New  System.  The  new  system  of  New 
York  City  is  thus  the  result  of  protracted  and  searching  dis- 


is  well  illustrated  by  the  instructions  which  200  district  dele- 
gates of  the  Teachers'  Interests  Organization  took  to  their  schools  after 
a  meeting  in  the  High  School  of  Commerce  (April  ipth)  : 

"i.  Do  all  in  your  power  to  prevent  the  governor's  signature  from 
being  placed  upon  the  bill  by  means  of  letters,  not  only  from  the  teachers 
but  from  citizens  and  taxpayers.  In  these  letters  state  three  or  four 
specific  reasons  for  opposing  the  bill.  Don't  write  long  letters. 

"2.  Members  and  their  friends  should  call  on  every  politician,  every 
person  in  power  that  they  think  can  have  any  weight  with  the  governor. 

"3.  Kindly  get  a  petition  signed  by  every  teacher,  if  possible,  in  your 
school,  by  every  parent  or  citizen  in  the  neighborhood  or  in  your  ac- 
quaintance and  send  it  to  the  governor.  State  at  the  head  of  this  peti- 
tion why  you  are  opposed  to  the  bill,  giving  five  or  six  definite  reasons. 
Chief  among  these  are  that  the  proposed  deductions  are  a  reduction  in 
salary;  that  the  teachers  are  given  but  three  of  the  seven  members  on 
the  board  of  retirement,  and  that  the  bill  is  an  administration  measure 
of  the  city  authorities." 

'Brooklyn  Daily  Eagle,  May  3,  1917. 

259 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

cussion  and  of  the  greatest  possible  accommodation,  through 
necessity,  of  the  conflicting  interests  involved.  But  it  is  the 
fruit  also  of  perhaps  the  most  thorough  and  painstaking  study 
that  has  yet  been  applied  to  the  teachers'  retirement  problem 
in  this  country.  A  detailed  examination  of  its  provisions, 
therefore,  seems  desirable. 

Benefits  Provided.  Membership  in  the  system  is  com- 
pulsory for  all  teachers  (present  teachers  and  new  entrants) 
having  a  permanent  license.  Teachers  without  a  permanent 
license  may  also  join  the  system. 

Retirement  is  made  dependent  either  upon  age  (voluntary 
at  65,  compulsory  at  70)  or  length  of  service  (35  years)  or 
disability.  The  retirement  allowance  consists  of  two  parts — 
an  "annuity"  purchased  by  the  teachers'  contributions,  and  a 
"pension"  supplied  by  the  city — and  amounts  at  the  full  rate 
of  contributions  to  about  one-half  of  the  average  salary  for 
the  last  ten  years.  The  amount  of  the  allowance  varies  accord- 
ing to  the  rate  of  advancement  as  determined  by  different 
methods  in  the  cases  of  new  entrants  and  of  the  present 
teachers. 

In  case  of  new  entrants,  contributions  are  so  graded  accord- 
ing to  the  age  and  the  sex  of  the  contributor  as  to  purchase 
an  annuity  of  about  one-fourth  of  his  average  salary  for  the 
last  ten  years,  if  he  advances  at  the  average  rate;  slightly 
less,  in  case  of  rapid  advancement;  or  slightly  more,  if  he 
advances  slowly.  The  "pension"  amounts  strictly  to  one- 
fourth  of  the  average  salary. 

In  the  case  of  the  present  teachers,  the  method  of  comput- 
ing the  annuity  is  different  in  that  it  amounts  to  less  than 
one- fourth  of  salary,  because  they  have  not  contributed  at  the 
new  rate  during  their  previous  service  and  cannot,  therefore, 
purchase  the  same  annuity  as  the  new  entrants.  The  differ- 
ence is  supplied  by  the  city  in  the  form  of  an  additional  pen- 
sion of  one  thirty-fifth  of  one  quarter  of  the  average  salary  for 
each  year  of  previous  service  not  exceeding  35  years.  Thus,  in 

260 


THE  NEW  YORK  CITY  FUND 

their  case,  too,  the  total  benefit  consisting  of  the  annuity,  one- 
fourth  salary  pension  and  additional  one- thirty-fifth  pension, 
amounts  to  about  one-half  salary  in  case  of  the  average  ad- 
vancement and  the  full  rate  of  contributions. 

In  the  event  of  disability  after  10  years  of  service  a  retire- 
ment benefit  is  provided  which  consists  of :  ( I )  the  "annuity" 
purchased  by  the  teachers'  contributions;  (2)  a  "pension" 
of  one-fifth  of  the  average  salary  and  (3)  an  additional  "pen- 
sion" of  one-thirty-fifth  of  one  quarter  of  the  average  salary 
for  each  year  of  previous  service. 

Upon  resignation,  dismissal  or  death,  all  contributions, 
together  with  compound  interest  at  4  per  cent,  are  refunded 
to  the  teacher  or  to  his  assigns.  If  the  teacher  dies  in  active 
service  after  becoming  eligible  to  retirement,  a  death  benefit 
of  one-half  of  the  preceding  year's  salary  is  paid  by  the  city 
in  a  lump  sum  to  his  estate. 

Among  the  many  excellent  features  of  the  system,  the  pro- 
visions for  optional  benefits  deserve  attention,  for  they  make 
it  flexible  and  adaptable  to  the  varying  needs  of  the  indi- 
vidual teacher.  After  becoming  eligible  for  retirement  on 
half  pay,  a  teacher  still  continuing  in  the  service  may  with- 
draw the  annual  interest  on  his  accumulations  or  such  part 
of  the  principal  as  will  not  be  required  to  provide  him  an 
allowance  of  half -pay  on  account  of  a  more  advanced  age 
and  consequent  reduction  in  the  cost  of  his  annuity.  It  is 
further  provided  that  any  contributor  may,  upon  retirement, 
elect  to  receive  the  actuarial  equivalent  of  his  pension  and 
annuity  in  any  one  of  the  follownig  forms: 

1.  His  regular  annuity  and  pension,  or 

2.  A  reduced  benefit  with  a  provision  that  in  case  he  dies 
before  he  has  received  the  total  value  of  his  annuity  and 
pension,  the  balance  shall  be  paid  to  his  heirs,  or  assigns, 
or 

3.  Reduced  benefits  covering  two  lives  with  a  provision  that 
upon  the  death  of  the  teacher  the  same  benefits  or  one- 
half  of  such  benefits  shall  be  continued  throughout  the 

261 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

life  of  such  person  as  the  teacher  shall  have  designated, 
or 

4.  Such  other  form  of  actuarial  equivalent  as  may  be  certi- 
fied by  the  actuary  and  approved  by  the  retirement  board. 

Financing  Benefits  for  New  Entrants.  In  order  that 
the  system  shall  operate  strictly  on  a  reserve  basis,  both  the 
city  and  the  teachers  set  aside  each  year  certain  percentages 
of  salary  to  special  reserve  funds,  from  which  the  annuities 
and  the  pensions  of  the  new  entrants  are  eventually  to  be  paid. 
Each  teacher  has  practically  an  individual  savings  account 
in  the  "annuity  savings  fund"  to  which  his  contributions  are 
credited.  The  city  on  the  other  hand  contributes  to  a  separate 
reserve  fund  (called  "contingent  reserve  fund")  on  account 
of  those  contributors  who  may  retire  on  superannuation  or 
disability.  It  discounts  the  number  of  those  among  the  new 
entrants  who  will  drop  out  because  of  resignation,  dismissal 
or  death  before  retirement,  and  it  does  not  contribute  on  their 
account. 

The  rate  of  contributions  of  the  teachers  is  not  definitely 
fixed  by  the  law.  Each  new  entrant  is  to  contribute  (the  pro- 
vision being  mandatory)  such  percentage  of  his  salary  as 
may  be  computed  by  the  actuary  to  be  sufficient  to  purchase 
an  annuity  of  one-fourth  average  salary.  The  rates  are,  there- 
fore, different  at  each  entrance  age.  The  following  rates 
taken  for  certain  ages  may  serve  as  an  illustration : 

Percentage  of  Salary  Percentage  of  Salary 

Age  at  Entrance                      Contributed  by  Men  Contributed  by  Women 

For  Retirement  For  Retirement 

at  the  Age  of  65  at  the  Age  of  65 

25                                               2.85  3-23 

30                                               3-32  379 

35  4-05  4-66 

Contributions  required  for  retirement  at  an  earlier  age  than 
65  are  considerably  higher.  Thus  a  man  teacher  entering  at 
25,  who  would  elect  to  contribute  towards  his  half  pay  pension 
to  be  payable  on  the  completion  of  35  years  of  service,  i.  e.  at 
the  age  of  60,  will  have  to  contribute  at  the  rate  of  4.24  per 
cent  instead  of  2.85  per  cent  required  for  the  age  of  65. 

262 


THE  NEW  YORK  CITY  FUND 

Financing  Benefits  of  Present  Teachers.  The  contribu- 
tions of  the  teachers  who  were  in  service  at  the  establish- 
ment of  the  system  are  funded  in  a  similar  manner  and  in 
the  same  reserve  fund  ("savings  and  annuity  fund")  as  the 
contributions  of  new  entrants.  An  entirely  different  method 
is,  however,  provided  for  the  city's  contribution.  The  law 
provides  that  the  city  shall : 

1.  Appropriate  each  year  on  a  cash  disbursement  basis  the 
amount  needed  for  the  payment  of  pensions  of  the  retir- 
ing present  teachers,  and 

2.  In  addition  set  aside  each  year  one  million  dollars  as  a 
partial  reserve  against  future  pension  payments  to  pres- 
ent teachers  until  the  fund  as  created  is  equivalent  to 
all  accumulations  of  present  teachers. 

This  partial  reserve  considerably  reduces  the  future  pay- 
ments of  the  city  and  thus  prevents  an  excessive  growth  of  the 
burdens  of  the  future  generation  of  taxpayers  and  safeguards 
the  system  against  sudden  attack. 

Funds.  Several  funds  are  set  up  each  of  which  performs 
a  distinct  function.  The  "annuity  savings  fund,"  in  which 
the  contributions  of  the  members  remain  until  retirement,  per- 
forms the  functions  of  a  savings  fund,  the  contributions  being 
returned  with  4  per  cent  compound  interest  to  those  who 
resign,  die  or  are  dismissed.  On  the  date  of  retirement  the 
contributions  are  transferred  to  the  "annuity  reserve  fund" 
in  which  they  acquire  insurance  features,  being  used  to  pur- 
chase the  annuities  of  the  new  entrants. 

The  contributions  of  the  city  are  paid  into  the  so-called 
"contingent  reserve  fund."  From  this  fund  are  paid  the 
death  benefits  for  "new  entrants"  provided  by  the  system. 
On  the  retirement  of  a  teacher,  the  purchase  price  of  a  pen- 
sion, if  he  or  she  be  a  "new  entrant,"  or  an  amount  equal  to 
the  accumulated  contributions  paid  by  him  or  her,  if  he  or  she 
be  a  "present  teacher,"  is  transferred  to  the  so-called  "Pension 
Reserve  Fund  No.  i ;"  and  from  this  fund  the  annual  pensions 
are  paid. 

263 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

A  so-called  "Pension  Reserve  Fund  No.  2"  is  also  set  up. 
Into  this  fund  were  paid,  at  the  establishment  of  the  system, 
all  moneys  remaining  in  the  old  retirement  fund.  To  this 
fund  the  city  adds,  as  it  becomes  necessary,  the  moneys  needed 
to  pay  the  pensions  to  those  already  on  the  pension  roll  at  the 
time  of  the  establishment  of  the  system,  and  also  such  part 
of  the  pensions  of  "present  teachers"  as  are  not  paid  out  of 
"Pension  Reserve  Fund  No.  I."  The  payment  of  death- 
benefits  to  "present  teachers,"  and  the  refund  to  such  teachers, 
in  case  of  dismissal,  of  the  contributions  made  by  them  under 
the  old  system,  are  also  paid  out  of  this  fund.  Except  for  the 
comparatively  minor  amount  received  from  the  old  fund, 
this  "Pension  Reserve  Fund  No.  2"  is  not  in  reality  a  reserve 
fund  so  much  as  an  appropriation  account. 

Under  the  head  of  "Expense  Fund"  account  is  kept  of  the 
moneys  annually  appropriated  by  the  city  to  defray  the 
expenses  of  the  administration  of  the  fund. 

Management.  The  management  of  the  system  is  in  a 
board  of  seven  members,  of  whom  three  are  elected  by  the 
teachers,  three  (the  comptroller  and  two  members  appointed 
by  the  mayor)  represent  the  city,  and  the  seventh  is  the  presi- 
dent of  the  board  of  education.  All  these  members  serve 
without  compensation.  They  may  employ  a  secretary,  an 
actuary  and  such  medical,  clerical  and  other  staff  as  is  neces- 
sary, and  fix  their  compensation. 

Actuarial  Valuations.  The  law  provides  that  the  first 
actuarial  investigation  of  the  mortality  and  service  experience 
and  the  first  valuation  of  the  fund  shall  be  made  in  1919,  two 
years  after  the  establishment  of  the  system ;  the  second,  three 
years  after  the  first,  and  that  investigation  be  made  every  five 
years  thereafter.  On  the  basis  of  these  investigations  the 
retirement  board  shall  (i)  adopt  such  mortality  and  other 
tables  as  shall  be  necessary;  (2)  certify  the  rates  of  con- 
tributions necessary  to  pay  the  annuities  provided  in  the  bill, 
and  (3)  certify  the  rates  of  the  city's  contributions  with 
respect  to  new  entrants. 

264 


CHAPTER   XVII 
THE   PENNSYLVANIA   SYSTEM 

Soon  after  the  years  1894-1896,  when  retirement  laws  for 
teachers  were  passed  by  the  legislatures  of  New  York,  New 
Jersey,  Illinois  and  Ohio,  a  movement  developed  among  the 
teachers  of  Pennsylvania  in  favor  of  obtaining  retirement 
legislation.  The  teachers  of  Philadelphia  took  the  leading 
part  in  this  movement.  The  result  was  that  in  the  year  1905 
a  provision  was  added  to  the  school  law  allowing  any  city  of 
the  first  class  (in  reality  only  the  city  of  Philadelphia)  to 
establish  a  retirement  fund.  The  wording  of  this  provision 
was  very  brief  and  indefinite.  The  fund  was  to  consist  "of 
all  funds  available  for  like  purposes  at  the  time  of  enactment 
of  this  law,  together  with  such  additions  thereto  as  the  Board 
may  from  time  to  time  prescribe,  and  such  money  as  may 
be  donated  or  bequeathed  for  such  purposes." 

No  rules  were  set  as  to  the  conditions  under  which  retire- 
ment could  take  place  and  the  amount  of  annuity  which 
should  be  granted.  It  was  simply  provided  that  "any  teacher, 
principal  or  supervising  official  retired  by  the  Board  of  Public 
Education  shall  receive  from  the  Board  such  an  annuity  as 
the  Board  of  Education  shall  prescribe." 

Under  this  law  the  Philadelphia  fund,  the  first  teachers' 
retirement  fund  in  Pennsylvania,  was  established.  Its  rules 
and  by-laws  were  formulated  and  approved  by  the  local  board 
of  education. 

As  the  teachers  in  other  cities  of  the  state  were  anxious 
to  have  a  similar  retirement  fund,  the  law  was  amended  in 
1907  extending  the  permission  to  establish  retirement  funds 

265 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

to  the  cities  of  second  and  third  classes.     The  wording  of 
the  law  remained  substantially  the  same. 

Under  this  amendment  Harrisburg  established  a  retirement 
fund  in  1908,  and  Wilkes-Barre  in  1910. 

In  1911  a  further  amendment  was  enacted  extending  the 
application  of  the  law  to  "any  school  district"  and  specifically 
providing  that  any  board  of  education  might  contribute  to 
the  fund  and  also  "provide  in  the  contract  with  its  teachers 
that  they  shall  contribute  a  reasonable  sum  from  their  salaries 
each  year"  and  that  "where  the  teachers  contribute  to  any 
retirement  fund  they  shall  be  represented  in  making  the  regu- 
lations governing  it,  and  its  control  and  management." 

During  the  five  years  following  the  passage  of  this  act  the 
following  seven  cities  established  retirement  funds: 
Scranton    in    1911 


Pittsburgh 
Altoona  . . 
Chester  . . 
Reading  . . 
Lancaster 
Erie  . 


1912 
1913 
1913 
1913 
1914 
1916 


To  many  leaders  of  the  pension  movement  the  results  of 
the  permissive  legislation  seemed  disappointing.  They  real- 
ized that  the  hundreds  of  small  localities  might  never  take  any 
action  in  the  matter  of  making  retirement  provisions  for  their 
teachers,  and  they  urged  that  the  state  step  in,  take  the  retire- 
ment question  out  of  the  jurisdiction  of  the  localities  and  estab- 
lish one  state-wide  and  state-administered  system  covering 
all  the  teachers  in  the  state. 

There  was,  however,  wide  disagreement  as  to  the  extent 
to  which  the  state  should  go  into  the  matter.  The  State 
Teachers'  League  took  the  extreme  position  that  the  state 
should  bear  the  entire  cost  of  the  system  and  relieve  the 
teachers  of  any  obligation  to  save  towards  their  future;  and 
that  the  entire  control  of  the  system  be  vested  in  the  state 
superintendent  of  schools.  The  league  accordingly  framed 
a  bill  in  1907  providing  that  any  teacher  who  had  taught  for 

266 


THE  PENNSYLVANIA  SYSTEM 

30  years,  20  years  of  which  had  been  in  Pennsylvania  schools, 
should  receive  from  the  state  an  annuity  of  one-half  of  his 
average  salary  for  the  last  five  years,  with  a  minimum  of  $200 
and  a  maximum  of  $600.  No  special  fund  was  to  be  set  aside 
for  this  purpose.  Each  year  an  appropriation  was  to  be  made 
of  the  sum  necessary  to  meet  the  annuity  requirements  of 
that  year.  The  bill  met  with  strong  opposition  and  failed 
to  pass. 

The  State  Educational  Association  went  to  the  other  ex- 
treme and  supported  the  principle  that  the  teachers  should 
bear  the  entire  cost  of  the  system.  It  prepared  a  bill  provid- 
ing for  the  establishment  of  a  retirement  fund  supported  by 
teachers'  contributions  and  administered  by  a  board  consisting 
of  five  members  appointed  by  the  state  superintendent  of 
schools,  of  whom  one  was  to  be  a  classroom  teacher,  one  a 
county  or  district  superintendent  and  two  not  teachers.  The 
contributions  were  to  diminish  with  longer  service  from  4  per 
cent  of  salary  at  the  outset  to  I  per  cent  during  the  final  period. 
Any  teacher  who  reached  the  age  of  60  and  completed  30  years 
of  service  could  retire  on  a  pension  of  one-sixth  of  the  average 
monthly  salary  of  the  teacher,  multiplied  by  the  number  of 
years  he  had  served.  Disability  pensions  were  provided  and 
the  contributions  were  to  be  returned  in  cases  of  resignation. 

The  bill  was  introduced  in  the  legislature  in  1915  and  was 
widely  discussed.  Objection  was  made  that  it  imposed  upon 
the  teacher  a  disproportionately  heavy  charge  during  the 
beginning  of  her  career  when  she  was  the  least  able  and 
willing  to  make  provisions  for  the  future  and  reduced  her 
burdens  during  later  periods  when  her  salary  and  foresight 
have  usually  increased.  The  rate  of  contributions  was  not 
based  on  any  actuarial  calculations  and  was  inadequate.  The 
tenth  annual  report  of  the  Carnegie  Foundation  of  Teaching 
said  about  the  bill : 

The  bill  encountered  much  opposition;  the  teachers  in  the 
small  systems  objected  to  the  burden  of  the  contribution, 

267 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

which  was  not  offset  by  contributions  from  the  state;  the 
teachers  in  the  larger  systems  were  opposed  to  a  scheme  that 
would  deprive  them  of  the  benefits  of  existing  arrangements 
in  which  the  contributions  were  not  so  high,  the  employing 
authority  supported  the  fund,  and  some  assets  had  already 
been  accumulated.  The  chief  weakness  of  the  measure  was 
the  inadequate  financing,  since  no  teacher  would  have  been 
required  to  contribute  more  than  $592  on  a  basis  of  eight 
contributions  per  year, — a  deficiency  which  no  amount  of 
complicated  regulations  could  set  right.  The  measure  might 
perhaps  have  been  assured  of  earlier  success  if  its  advocates 
had  come  forward  with  a  definite  and  straightforward  request 
for  state  aid  instead  of  urging  a  scheme  which  could  have 
been  saved  from  early  insolvency  only  by  a  subsequent  appeal 
to  the  state.  Too  much  is  at  the  stake  when  upwards  of  40,000 
teachers  are  involved,  to  indulge  in  experiments,  even  if  they 
are  intended  merely  as  entering  wedges  for  proving  the  need 
of  state  support. 

The  bill  failed  to  pass.  There  then  developed  a  tendency 
to  find  some  middle  ground  between  the  two  extreme  ideas 
which  had  been  defeated.  The  two  associations  which  had 
hitherto  disagreed  so  sharply  came  to  agreement.  A  joint 
comniittee  was  appointed  which  entrusted  to  the  actuary  of 
the  New  York  City  Commission  on  Pensions  the  work  of  pre- 
paring an  actuarial  system. 

The  fact  that  the  new  system  was  to  be  introduced  where 
there  was  no  system  before,  permitted  its  framers  to  include 
in  it  many  progressive  features,  the  inclusion  of  which  in 
the  New  York  City  system  had  been  successfully  opposed  by 
those  who  claimed  to  have  "vested  rights"  in  the  unsound 
provisions  which  had  been  previously  enacted. 

The  work  was  completed  in  the  course  of  a  few  months 
and  the  bill  was  presented  to  the  legislature  early  in  the  ses- 
sion of  1917.  An  able  propaganda  explaining  the  funda- 
mental principles  of  the  bill  was  conducted  by  the  committee 
of  the  two  associations  and  an  intelligent  public  discussion 
of  the  bill  was  obtained  with  the  result  that  the  support  of 
the  majority  of  the  teachers  and  legislators  was  secured.  The 

268 


THE  PENNSYLVANIA  SYSTEM 

school  employees,  to  whom  the  bill  originally  did  not  apply, 
addressed  a  petition  that  they  be  included  in  it.  Their  request 
was  granted  and  the  name  of  the  proposed  fund  was  changed 
from  Teachers  Retirement  Association,  to  School  Employees 
Retirement  Association.  The  bill  passed  both  houses,  meet- 
ing very  little  opposition,  was  signed  by  the  governor  and 
became  a  law  on  July  18,  191 7-1 

Benefits.  Membership  in  the  new  system  is  compulsory 
for  all  persons  entering  the  service  after  the  date  of  enactment. 
Teachers  already  in  the  service  are  given  until  July  I,  1919 
to  elect  whether  or  not  to  enter. 

Retirement  takes  place  on  the  basis  of  age,  not  length  of 
service.  Any  person  who  has  reached  62  years  of  age  may 
retire  regardless  of  his  or  her  length  of  service.  This  feature 
of  the  system  prevents  the  early  retirements  which  are  possible 
under  the  provision  of  the  New  York  City  system,  which 
allows  retirement  after  35  years  of  service,  regardless  of  age, 
and  which,  as  has  been  shown,  was  there  adopted  for  the  sole 
purpose  of  effecting  a  compromise  with  the  teachers  who 
otherwise  would  have  blocked  the  passage  of  the  bill. 

Retirement  is  made  compulsory  at  70.  The  superannua- 
tion benefit  is  fixed  at  the  rate  of  one-eightieth  of  the  average 
salary  for  the  last  ten  years  for  each  year  of  service  (with 
a  maximum  of  50  per  cent  of  the  final  salary),  whereas  in 
the  New  York  City  system  it  is  fixed  at  one-seventieth.  The 
lower  scale  of  benefits  reduces  the  cost  to  the  teachers  as 
well  as  to  the  state. 

The  benefit  consists  of  two  parts :  one  for  "subsequent  serv- 
ice" rendered  after  the  establishment  of  the  system,  and 
the  other  for  "prior  service."  The  first  divides  itself  into 
two  equal  parts,  one  purchased  by  the  employee's  contribu- 
tions, and  called  "employee's  annuity"  and  the  other  provided 
by  the  state's  contribution  and  called  "state  annuity."  Each 

1  Pennsylvania,  Acts,  1917.    No.  343.    July  18,  1917. 

269 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

is  fixed  at  one  one-hundred-sixtieth  of  the  average  salary 
multiplied  by  the  number  of  years  of  subsequent  service.  The 
benefit  for  "prior  service"  is  provided  entirely  at  the  expense 
of  the  state  and  is  called  "additional  state  annuity."  It  is 
fixed  at  the  rate  of  one-eightieth  of  the  average  salary  for  the 
last  ten  years  multiplied  by  the  number  of  years  of  prior 
service. 

Disability  Benefit.  Any  person  who,  after  10  or  more 
years  of  service  and  before  reaching  the  age  of  62,  has 
become  disabled,  receives  a  disability  allowance  of  one-nine- 
tieth of  his  average  salary  for  the  last  ten  years  multiplied  by 
the  number  of  years  of  service.  The  benefit  must  be  neither 
less  than  30  per  cent  of  salary  nor  more  than  eight-ninths  of 
the  benefit  to  which  the  person  would  have  been  entitled  had 
he  or  she  continued  in  the  service  until  the  age  of  62.  Once 
each  year  the  retirement  board  may  require  the  disability 
annuitant  to  submit  to  a  medical  reexamination.  Should  the 
annuitant  while  under  the  age  of  62  refuse  to  be  reexamined 
or  should  it  be  found  that  he  is  no  longer  disabled,  the  board 
may  discontinue  his  state  annuity.  In  case  the  disability 
annuitant  is  engaged  in  another  gainful  occupation  the  board 
may  refuse  his  state  annuity.  Should  a  disability  annuitant 
recover  and  be  restored  to  school  service,  his  retirement  allow- 
ance ceases  and  his  rate  of  contribution  is  the  same  as  before 
disability. 

Death  Benefit.  In  the  case  of  death  before  retirement 
the  dependents  of  the  deceased  received  the  employee's  con- 
tributions with  compound  interest  at  4  per  cent.  With  regard 
to  death  after  retirement  the  provisions  are  similar  to  those 
in  New  York.  The  employee  may  at  the  time  of  his  retire- 
ment choose  a  smaller  allowance  with  the  agreement  that 
the  balance  shall  be  paid  to  his  dependent  or  assignee  in  the 
form  of  either  a  lump  sum  or  further  annuity. 

Any  employee  who  resigns  or  is  dismissed  before  retire- 
ment receives  back  all  his  contributions  together  with  4  per 
cent  compound  interest. 

270 


THE  PENNSYLVANIA  SYSTEM 

Teachers'  Contributions.  Each  teacher  contributes  a  cer- 
tain percentage  of  his  salary  according  to  his  age  at  the  time 
of  becoming  a  member  of  the  system.  The  rate  of  contribu- 
tion is  so  fixed  as  to  provide  at  the  age  of  62  an  annuity  of  one 
one-hundred-sixtieth  of  the  average  salary  for  each  year  of 
subsequent  service.  In  view  of  the  fact  that  all  contributions 
are  calculated  to  the  same  retirement  age  instead  of  as  in 
New  York  to  different  ages  according  to  length  of  service, 
the  same  contribution  obtains  for  all  teachers  of  the  same  age 
irrespective  of  whether  they  have  previous  service  to  their 
credit  or  have  just  entered  the  service.  The  scale  of  con- 
tributions, which  is  shown  on  the  following  page,  contains, 
therefore,  only  about  eighty-six  different  rates  (two  for  each 
age,  one  being  for  men  and  the  other  for  women),  whereas 
the  New  York  City  scale  of  contributions  contains  about  2,000 
different  rates.  The  difficulties  which  the  members  of  the  New 
York  City  systems  frequently  experience  in  having  to  select  be- 
tween a  number  of  different  rates,  the  arrangement  of  which 
they  do  not  understand,  is  hereby  avoided,  and  the  task  of 
keeping  records  is  simplified. 

Contributions  are  never  required  on  any  portion  of  a  salary 
in  excess  of  $2,000.  The  older  entrants  whose  regular  rate 
of  contribution  exceeds  5  per  cent  may  lower  it  to  5  per  cent, 
thereby  either  reducing  their  annuity  or  postponing  the  date 
of  their  retirement.  Such  a  lowering  of  their  rate  does  not 
affect  their  state  annuity.  In  this  respect  the  Pennsylvania 
system  is  also  in  advance  of  the  New  York  City  system  which 
allows  the  members  to  reduce  their  contributions  as  low  as  3 
per  cent  and  thereby  greatly  reduce  their  future  benefits. 

State  Contribution.  The  state  contributes  on  a  full  re- 
serve basis  on  account  of  all  past  and  future  services  of  all 
its  members,  whereas  in  New  York  the  city  contributes  on  a 
full  reserve  basis  only  on  account  of  new  entrants,  the  partial 
reserve  basis  being  adopted  for  present  teachers.  It  con- 
tributes semi-annually  2.8  per  cent  of  the  annual  salaries,  and 

271 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


each  semi-annual  payment  must  be  at  least  3  per  cent  higher 
than  the  second  preceding  semi-annual  payment.  This  con- 
tribution will  create  a  sufficient  reserve  in  less  than  forty  years, 

SCALE  OF  EMPLOYEES'  CONTRIBUTIONS  IN  THE  PENNSYLVANIA  FUND 


Age 

PERCENTAGE  OF  SALARY 
REQUIRED  IN  CASE  OF 

Age 

PERCENTAGE  OF  SALARY 
REQUIRED  IN  CASE  OF 

Men 

Women 

Men 

Women 

18 

3.33 

3.69 

40 

3.74 

4.45 

19 

3.33 

3.71 

41 

3.79 

4.52 

20 

3.33 

3.74 

42 

3.84 

4.59 

21 

3.33 

3.75 

43 

3.89 

4.67 

22 

3.34 

3.78 

44 

3.95 

4.75 

23 

3.34 

3.79 

45 

4.01 

4.83 

24 

3.34 

3.81 

46 

4.07 

4.92 

25 

3.35 

3.83 

47 

4.14 

5.01 

26 

3.36 

3.85 

48 

4.20 

5.10 

27 

3.37 

3.88 

49 

4.27 

5.20 

28 

3.38 

3.90 

50 

4.34 

5.29 

29 

3.40 

3.93 

51 

4.41 

5.40 

30 

3.42 

3.96 

52 

4.49 

5.50 

31 

3.44 

4.00 

53 

4.57 

5.61 

32 

3.46 

4.03 

54 

4.64 

5.72 

33 

3.49 

4.07 

55 

4.73 

5.83 

34 

3.51 

4.11 

56 

4.81 

5.94 

35 

3.55 

4.16 

57 

4.90 

6.07 

36 

3.58 

4.21 

58 

4.98 

6.18 

37 

3.62 

4.27 

59 

5.08 

6.31 

38 

3.65 

4.32 

60 

5.16 

6.42 

39 

3.70 

4.38 

61 

5.30 

6.59 

and  can  then  be  discontinued.  It  will  liquidate  the  accrued 
liabilities  in  a  much  shorter  space  of  time  than  will  the  partial 
reserve  contribution  of  New  York  City. 

Reimbursement.  The  state  is  reimbursed  by  the  localities 
to  the  extent  of  one-half  of  the  contribution  which  it  makes 
on  account  of  the  teachers  that  they  employ.  The  purpose 
of  this  arrangement  is  to  interest  the  local  employing  body  in 
the  welfare  of  their  employees  and  to  equitably  distribute  the 
cost.  The  reimbursement  is  deducted  from  the  funds  which 
it  apportions  for  school  purposes. 

Valuation.     It    is    estimated    that    the    total    liabilities    on 

272 


THE  PENNSYLVANIA  SYSTEM 

account  of  present  employees  amount  to  about  $61,000,000, 
of  which  $23,000,000  will  be  contributed  by  the  teachers  and 
$38,000,000  by  the  state  and  by  the  localities.  The  annual 
appropriation  on  account  of  present  employees  now  amounts 
to  about  $1,500,000.  The  appropriation  on  account  of  new 
entrants,  which  is  fixed  at  2.75  per  cent  of  salaries,  during 
the  first  year  amounts  to  about  $25,000  and  will  increase  each 
year  thereafter  at  least  by  that  amount.  Actuarial  valuations 
are  to  be  made  in  1919,  1921,  1924  and  every  fifth  year  there- 
after. 

Management.  The  system  is  managed  by  a  retirement 
board  of  seven  members.  The  superintendent  of  public 
instruction,  the  state  treasurer  and  one  member  appointed  by 
the  governor  represent  the  state.  Three  members  are  elected 
by  the  teachers,  and  the  seventh  member  is  elected  by  the  six. 
The  system  is  subject  to  the  supervision  of  the  state  depart- 
ment of  insurance. 

Relation  to  Local  Funds.  The  law  allows  any  existing 
local  retirement  fund  to  merge  with  the  state  fund  if  two- 
thirds  of  the  members  of  the  local  fund  apply  for  member- 
ship in  the  state  fund  "by  a  petition  duly  signed,  verified  and 
approved  by  their  employer."  In  that  case  the  local  system 
is  discontinued  and  dissolved  as  follows:  The  members  cease 
to  contribute  to  the  old  system  and  begin  to  contribute  to  the 
state  fund  in  accordance  with  their  age;  all  the  assets  of  the 
fund  are  held  by  the  locality  as  a  trust  fund  and  are  applied 
to  the  payment  of  the  benefits  to  the  teachers  already  retired, 
which  payment  becomes  an  obligation  of  the  locality.  In  case 
the  contributor  upon  his  transfer  does  not  receive  back  the 
contributions  which  he  or  she  has  made  to  the  discontinued 
system,  the  amount  of  such  contributions  is  to  be  contributed 
by  the  state  at  the  time  of  his  retirement  and  to  purchase  for 
him  an  additional  annuity  or  such  other  benefit  as  he  may 
elect,  over  and  above  the  benefits  provided  by  the  act. 

273 


CHAPTER  XVIII 

THE  SCIENTIFIC  PENSION  LAWS  OF  1919:    NEW 
JERSEY,  OHIO  AND  VERMONT 

During  the  year  1919  three  new  scientifically  constructed 
pension  laws  were  placed  on  the  statute  books,  thus  bringing 
the  total  number  of  scientific  pension  laws  to  seven.  These 
were :  New  Jersey,  Ohio  and  Vermont.  They  differ  in  several 
respects  from  the  systems  of  Massachusetts,  Connecticut,  New 
York  City  and  Pennsylvania  and  deserve  to  be  studied  in  de- 
tail. The  text  of  these  laws  will  be  found  in  Appendix  3. 

New  Jersey.  The  investigation  of  the  teachers'  retirement 
situation  in  New  Jersey  conducted  by  the  Pierson  Commis- 
sion with  the  assistance  of  the  Bureau  of  State  Research  and 
described  in  chapter  XII,  culminated  in  the  preparation  and 
introduction  in  the  legislature  of  three  bills  providing  for  a 
complete  reorganization  of  the  old  retirement  systems.  They 
were  passed  by  the  legislature  and  enacted  on  April  10,  1919. 

The  most  important  of  the  three  new  laws  (ch.  80)  estab- 
lished a  new  retirement  system,  with  joint  contributions  on 
an  actuarial  basis,  which  will  gradually  supersede  the  old 
double  system.  The  second  law  (ch.  81)  amended  the  teach- 
ers' retirement  fund  act  by  allowing  the  members  of  the  fund 
to  withdraw  from  it  and  absolving  future  teachers  from  any 
obligation  to  belong  to  it,  in  view  of  its  insolvency.  The  third 
law  (ch.  82)  repealed  the  35  year  service  pension  act. 

The  reorganization  effected  under  these  laws  is  very  dif- 
ferent from  the  reorganization  effected  in  New  York  City. 
Instead  of  liquidating  the  old  system  at  one  stroke  and  taking 
over  at  once  all  its  assets  and  liabilities  and  its  entire  member- 
ship by  means  of  compulsion  as  New  York  City  did,  New  Jer- 

274 


NEW  JERSEY,  OHIO  AND  VERMONT 

sey  allowed  its  old  fund  to  continue  to  exist,  only  in  a  greatly 
reduced  scope  and  under  the  condition  that  it  gradually  wind 
up  its  affairs,  and  it  made  withdrawal  from  it  and  entrance 
into  the  new  fund  entirely  optional.  This  gradual  liquidation 
was  dictated  by  considerations  of  expediency  rather  than 
scientific  preference. 

Membership  in  the  new  system  is  compulsory  for  all  new 
appointees  but  optional  for  teachers  now  in  the  service.  The 
benefits  provided  by  the  system  are  as  follows: 

1.  A  superannuation  allowance  on  or  after  the  attainment 
of  the  age  of  62  of  approximately  i/7oth  of  the  average  salary 
of  the  last  five  years  multiplied  by  the  number  of  years  of 
teaching  service  (up  to  10  years  of  service  in  public  schools 
of   other   states   included)    minimum  $400.     The   allowance 
consists  of  a  pension  of  i/i4Oth  of  the  average  salary  of  last 
5   years  preceding  retirement   for  each   year  of   subsequent 
service  and  i/yoth  for  each  year  of  prior  service;  and  of  an 
annuity  of  such  amount  as  the  contributions  of  the  member 
will  provide  at  the  time  of  his  retirement,  on  the  basis  of  a 
mortality  experience  similar  to  that  obtained  in  New  York 
City  and  interest  compounded  at  4  per  cent. 

2.  A  disability  allowance  at  any  time  before  the  attainment 
of  the  age  of  62,  provided  the  teacher  has  served  10  years  in 
the  state,  of  i/7Oth  of  the  average  salary  multiplied  by  the 
number  of  years  of  service  (including  up  to  10  years  service 
rendered  in  public  schools  of  other  states),  minimum  30  per 
cent  of  salary,  or  $300. 

3.  An  additional  annuity  to  the  former  members  of  the  re- 
tirement fund  of  such  amount  as  their  contributions  to  the  old 
fund  without  interest  will  provide. 

4.  In  case  of  resignation  or  dismissal  before  retirement,  a 
refund  to  the  teacher  of  all  contributions  together  with  interest 
at  2>l/2  per  cent. 

5.  In  case  of  death  before  retirement,  a  return  to  the 
teacher's  legal  representatives  of  all  his  contributions  together 
with  interest  at  3^2  per  cent. 

6.  Optional  benefits  as  follows :  a  teacher  may  select  at  the 
time  of  retirement  to  convert  the  total  reserve  placed  to  his 
account  into  a  smaller  annual  allowance  with  the  provision 

275 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

that  the  balance  shall  be  paid  on  his  death  to  any  person  whom 
he  may  designate,  in  the  form  of  a  lump  sum  or  a  life  annuity. 

The  state  will  cover  the  total  cost  of  the  benefits  for  a  prior 
service  of  present  entrants  (the  accrued  liabilities)  and  half  of 
the  cost  of  their  benefits  for  future  service.  The  annual  con- 
tribution on  that  account  will  amount  to  5.02  per  cent  of  the 
total  payroll  of  all  members.  It  will  have  to  be  made  for  ap- 
proximately 30  years  when  the  entire  obligation  on  account  of 
the  present  members  will  be  liquidated.  On  account  of  all 
new  entrants  the  state  will  contribute  a  certain  percentage 
of  salary  graduated  according  to  the  age  of  the  entrant 
from  2  per  cent  up.  The  number  of  withdrawals  from  the 
service  have  been  discounted  so  that  the  state  contributes 
only  on  account  of  that  number  of  members  which  will  actually 
remain  in  the  service  and  no  part  of  its  contributions  will  re- 
vert to  it  in  cases  of  withdrawal. 

In  addition  to  this  obligation,  the  state  has  assumed  consid- 
erable liabilities  in  connection  with  the  two  old  retirement 
systems.  It  took  over  the  entire  pension  roll  and  such  part 
of  the  annuity  roll,  (i.  e.  at  least  80  per  cent  of  it),  as  the  re- 
tirement fund  will  be  unable  to  pay.  The  liability  thus  taken 
over  on  account  of  the  teachers  already  retired  was  estimated 
as  of  June  30,  1918 — at  $4,300,000.  It  was  greater  on  Sep- 
tember of  the  following  year  when  the  new  system  became 
effective. 

The  state  assumed  the  entire  cost  of  the  guarantee  of  the 
rate  of  interest  at  4  per  cent  and  of  the  minimum  allowance, 
and  practically  the  entire  cost  of  administration.  In  cases  of 
withdrawal  the  difference  between  interest  at  3^  per  cent  and 
the  guaranteed  rate  of  4  per  cent  is  applied  to  meet  part  of 
the  cost  of  administration.  The  part  so  covered  will  be  more 
or  less  insignificant. 

The  total  obligations  assumed  by  the  state  under  the  new 
system  amount  to  approximately  $24,000,000,  which  is  to  be 
divided  as  between  different  benefits  approximately  as  follows : 

276 


NEW  JERSEY,  OHIO  AND  VERMONT 


Pensions  and  annuities  already  outstanding $  4,000,000 

Superannuation  allowances  ($8,800,000  for  prior 

service  and  $5,300,000,  for  future  service).  .  .    14,100,000 

Disability  allowances 5,300,000 

Additional  annuities  in  compensation  of  contribu- 
tions made  to  the  old  retirement  fund 300,000 


The  members  contribute,  according  to  their  age,  such  a  per- 
centage of  their  salaries  as  will  provide  them  at  the  age  of  62 
(assuming  average  advancement  of  salary)  with  an  annuity  of 
one  one-hundred-fortieth  of  their  average  salary  of  the  last  5 
years  preceding  retirement.  Any  teacher  who  has  reached 
62  years  of  age  and  has  completed  35  years  of  service  may 
cease  to  contribute.  The  rates  of  contributions  are  as  fol- 
lows: 


AGE 

AT  ENTRANCE  INTO 
THE  NEW  FUND 

20 
21 
22 

23 
24 

25 
26 

27 
28 
29 

30 
31 

32 

33 
34 
35 
36 
37 
38 
39 


MEN 

( PERCENTAGE 
OF  SALARY) 
3.60 
3.60 
3.60 
3.61 
3.62 
3.62 

3-64 
3.66 

3-69 
3-72 
376 
3.80 

3-84 
3-89 
3-93 
3-97 
4.01 
4.07 

4-13 
4.19 

277 


WOMEN 

(PERCENTAGE 
OF  SALARY) 

3-9i 
3-93 
3-95 
3-98 
4.01 

4-05 
4.09 

4-13 
4.18 

4-25 
4-32 

4-39 

4.46 

.  4-53 
4.60 
4.68 

4-75 
4.84 
4-94 
5-04 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

AGE  MEN  WOMEN 

AT  ENTRANCE  INTO         (PERCENTAGE  (PERCENTAGE 

THE  NEW  FUND  OF  SALARY)  OF  SALARY) 

40  4.26  5.13 

41  4-33  5-22 

42  4.40          5.32 

43  4-47  5-42 

44  4-54  5-53 

45  4-6i  5.63 

46  4.68  5.73 

47  476  5-83 

48  4.84  5.93 

49  4.92  6.04 

50  5.01  6.16 

51  5.10  6.27 

52  5-19  6.38 

53  5-28  6.49 

54  5-37  6.60 

55  546  6.71 

56  5-56  6.83 

57  5-67  6.94 

58  5-78  7-05 

59  5-89  7-i7 

60  6.00  7.29 

The  average  contribution  of  the  member  will  be  4  per  cent. 
The  state  will  contribute  approximately  8^2  per  cent  of  the 
salaries  (including  the  accrued  liabilities  and  the  existing  re- 
tired roll)  i.  e.,  more  than  twice  the  amount  contributed  by  the 
teachers.  It  will  have  to  increase  its  annual  contribution  from 
approximately  $230,000  (the  amount  of  the  pension  roll)  to 
about  $1,250,000  i.  e.  to  more  than  five  times  the  previous 
amount.  Of  the  total  contributions  which  the  present  teachers 
will  pay  into  the  fund  in  the  future  only  $6,300,000,  will  be 
applied  to  the  purchase  of  superannuation  and  disability  an- 
nuities. The  major  part  of  their  contributions  will  never 
be  anything  but  mere  savings  accounts  which  will  be  with- 
drawn before  retirement. 

Every  five  years  actuarial  valuations  are  provided  at  which 

278 


NEW  JERSEY,  OHIO  AND  VERMONT 

the  rates  of  contributions  of  the  state  as  well  as  of  the  mem- 
bers can  be  either  increased  or  reduced  according  to  the  results 
of  the  investigations  of  the  mortality,  service,  and  salary  ex- 
perience. 

The  system  consists  of  six  funds :  the  annuity  savings  fund 
and  the  annuity  reserve  fund  for  the  members'  contributions : 
the  pension  fund  for  the  state's  contribution  for  present  active 
and  retired  teachers;  the  pension  accumulation  fund  and  the 
pension  reserve  fund  for  the  state's  contribution  on  account  of 
new  entrants;  and  the  expense  fund.  The  pension  accumula- 
tion fund  corresponds  to  the  contingent  reserve  fund  of  the 
New  York  City  and  Pennsylvania  systems.  The  term  is  more 
explicit,  as  it  indicates  that  in  this  fund  the  reserves  for  the 
payment  of  pensions  are  accumulated. 

The  board  of  trustees  consists  of  seven  members :  the  com- 
missioner of  education,  the  state  treasurer,  one  member  ap- 
pointed by  the  governor,  three  members  elected  by  the  members 
of  the  fund,  and  the  seventh  member  elected  by  the  six. 

Noteworthy  is  the  fact  that  in  preparing  this  legislative 
measure  the  commission  carefully  sounded  the  opinions  of  the 
teachers.  It  gave  a  wide  publicity  to  its  proposals,  carefully 
examined  all  the  criticisms  which  they  evoked  and  incorpor- 
ated in  the  bill  any  reasonable  suggestion  that  was  advanced. 

Originally  the  bill  based  retirement  allowances  on  the  av- 
erage salary  of  the  last  ten-year  period  preceding  retirement, 
as  the  latter  afforded  a  more  stable  basis  for  the  financing  of 
the  system  and  a  more  equitable  one  than  an  average  taken 
throughout  a  shorter  period.  But  the  teachers  urged  the  five- 
year  basis  in  order  that  the  pension  of  the  teachers  about  to 
retire  should  not  be  smaller  than  the  one  provided  under  the 
old  pension  law.  The  commission  yielded  on  this  point,  al- 
though it  considerably  increased  the  cost  to  the  state. 

The  disability  allowances  were  originally  fixed  at  the  one- 
seventy-fifth  rate,  but  the  commission  changed  it  to  the  one- 
seventieth  rate,  same  as  superannuation  allowances  because  the 

279 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

superannuation  age  was  fixed  rather  high  and  under  such 
conditions  disability  benefits  would  naturally  assume  a  con- 
siderable importance.  In  this  way  a  teacher  who  became  dis- 
abled at  57  after  35  years  of  service  could  retire  on  half  pay. 

Credit  for  outside  service  up  to  10  years  was  incorporated 
in  response  to  the  demand  of  some  teachers.  In  the  case  of 
present  teachers  the  credit  is  provided  entirely  at  the  expense 
of  the  state.  In  the  case  of  new  entrants  the  cost  of  it  was 
to  be  divided  between  the  teacher  and  the  state  on  a  50-50 
basis;  the  teacher  was  allowed  to  pay  the  contributions  for 
the  years  of  outside  service  for  which  he  claimed  credit,  either 
in  a  lump  sum  (which  he  could  easily  do  if  he  transferred 
from  a  system  which  refunded  to  him  his  contributions)  or  by 
means  of  annual  instalments. 

The  interest  rate  in  case  of  withdrawals  was  fixed  at  3^2 
per  cent  as  a  compromise  between  the  3  per  cent  rate  ori- 
ginally provided  in  the  bill  and  the  4  per  cent  urged  by  the 
teachers. 

The  prior  service  credit  was  made  renewable  in  case  a 
teacher  left  the  service  and  subsequently  returned. 

The  minimum  of  $400  for  superannuation  and  $300  for 
disability  was  included  because  the  teachers  asked  that  some 
minimum  be  fixed.  It  was  important  in  view  of  the  small 
salaries  in  rural  districts. 

The  guarantee  of  all  benefits  already  granted  was  added 
when  the  bill  was  before  the  legislature.  It  was  strongly 
urged  by  the  teachers.  Originally  the  bill  guaranteed  all 
pensions,  but  the  annuities  only  in  case  of  those  who  did  not 
receive  the  pension;  double  beneficiaries  would  have  suffered 
a  reduction  in  their  total  benefit.  Now  they  were  guaran- 
teed all  that  they  received  theretofore,  even  though  the  com- 
bined benefit  often  exceeded  100  per  cent  of  their  salary. 

The  only  point  urged  by  the  teachers  which  the  commission 
refused  to  concede  was  that  the  present  teachers  should  be 
allowed  to  retire  on  half-pay  after  35  years  of  service,  irre- 

280 


NEW  JERSEY,  OHIO  AND  VERMONT 

spective  of  age.  The  teachers  argued  that  they  had  this 
right  under  the  existing  law,  and  that  it  was  not  fair  to  take  it 
away  from  them,  and  that  it  would  not  cost  much  as  com- 
paratively few  would  avail  themselves  of  it.  The  commission 
replied  that  this  right  of  the  old  law  was  against  public  policy 
as  it  allowed  efficient  teachers  who  were  but  51  years  of  age 
to  retire,  and  that  it  would  add  approximately  $3,000,000  to 
the  burdens  of  the  state.  There  was  considerable  agitation 
on  this  point  among  the  teachers  and  efforts  were  made  to 
amend  the  bill  in  spite  of  the  commission,  but  these  efforts 
failed.  The  bill  passed  both  houses  without  this  amendment 
and  was  signed  by  the  governor. 

The  enactment  of  this  law  closed,  with  a  comparatively 
happy  solution,  the  pension  controversy  which  raged  for 
more  than  20  years  in  this  state. 

The  new  law  compares  very  favorably  with  the  laws  gov- 
erning other  scientific  systems.  It  provides  larger  benefits 
and  adjusts  the  problem  of  the  lower  paid  teachers  in  a  more 
satisfactory  way  than  some  of  the  others  do.  It  also  presents 
a  considerable  advance  so  far  as  legislative  drafting  is  con- 
cerned. It  is  built  in  accord  with  the  real  anatomy  of  a  pen- 
sion system.  It  consists  of  large  divisions  arranged  in  logical 
order.  Each  division  consists  of  sections,  which  are  grouped 
under  proper  subheads  and  each  of  which  presents  a  complete 
thought  and  can  be  easily  referred  to  and,  if  necessary, 
amended  without  disturbing  the  other  parts  of  the  structure. 
The  skeleton  of  the  law  is  as  follows: 

1.  Definitions. 

2.  Establishment  of  System. 

3.  Membership. 

4.  Service   Creditable. 

5.  Benefits. 

Superannuations. 
Disability. 

Withdrawal  and  Death  Benefits. 
Optional  Benefits. 
Benefits  of  Teachers  now  Retired. 
281 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

6.  Actuarial  Basis. 

7.  Funds  Created.     Contributions  Thereto  and  Payments 

Therefrom. 

Funds  Derived  from  Members'  Contributions. 
Funds  Derived  from  Employers'   Contributions. 

8.  Collection  of  Contributions. 

Collection  of  Members'  Contributions. 
Collection  of  Employers'  Contributions. 

9.  Administration. 

Board  of  Trustees. 

Administrative  Staff  and  Procedure. 

Management  of  Funds. 

10.  Other    Provisions. 

State  Supervision. 
Exemption  from  Taxation. 
Protection  against  Fraud. 
Repealer. 

Ohio.  As  early  as  1896  a  pension  law  for  teachers  was  en- 
acted in  Ohio.  It  applied  only  to  first  class  cities.  Subsequent 
amendments  (1900,  1902,  1904  and  1911)  extended  it  to  other 
cities,  increased  the  salary  deductions  to  $2  monthly  and  al- 
lowed the  cities  to  contribute  up  to  2  per  cent  of  the  school 
taxes.  All  these  laws  were  of  permissive  character.  Only  the 
larger  cities  and  a  few  of  the  smaller  ones  availed  themselves 
of  the  permission  to  establish  retirement  funds.  The  revenues 
provided  were  insufficient  to  finance  the  funds  on  a  permanent 
basis.  The  collapse  of  pension  funds  in  other  states  and  their 
reorganization  on  a  sound  basis  helped  to  call  the  attention  of 
the  leading  teachers  of  Ohio  to  the  shortcomings  of  their  own 
system  and  the  need  of  its  reorganization.  A  movement  was 
started  and  an  organization  formed  which,  with  the  assistance 
of  experts,  framed  a  bill  providing  for  the  establishment  of  a 
new  state-wide  pension  system  on  an  actuarial  basis.  The  bill 
passed  the  legislature  and  became  a  law  in  May,  1919. 

The  new  system  differs  in  several  respects  from  the  New 
York  City,  Pennsylvania  and  other  recently  enacted  systems. 
All  present  teachers,  who  do  not  belong  to  a  local  pension  fund, 

282 


NEW  JERSEY,  OHIO  AND  VERMONT 

who  do  not  notify  their  employing  board  that  they  desire  to  be 
exempted  from  membership  in  it,  become  members  of  it.  This 
feature  is  different  from  the  compulsory  feature  of  the  New 
York  City  system  which  allows  no  one  to  stay  out  of  the  system 
as  well  as  from  the  optional  feature  of  systems  which  admit 
only  those  present  teachers  who  apply  for  membership.  Under 
the  latter  arrangement  many  teachers  remain  outside  of  the 
system  not  because  they  do  not  want  to  join  but  because  they 
cannot  make  up  their  mind  and  take  a  definite  action.  Under 
the  Ohio  arrangement  a  large  proportion  of  them  would  drift 
into  the  system,  not  because  they  would  desire  to  join  but  be- 
cause they  would  hesitate  or  otherwise  fail  to  apply  for  exemp- 
tion. As  a  further  measure  designed  to  increase  the  member- 
ship of  the  system  it  is  provided,  that  "each  teacher  shall  be 
deemed  to  be  a  member  of  the  retirement  system  and  shall  have 
the  right  to  vote"  at  the  first  election  of  the  members  of  the 
board  of  trustees  and  "any  teacher  in  a  local  district  pension 
system  who  exercises  such  right  to  vote  shall  be  deemed  to  have 
petitioned  for  a  merger  with  the  state  teachers'  retirement 
system." 

A  teacher  may  retire  at  the  age  of  60.  Power  is  given  to 
the  board  to  retire  him  on  the  request  of  his  employing  board, 
as  in  other  systems.  On  retirement  he  is  entitled  to : 

(a)  Such  an  annuity  as  his  contribution  of  4  per  cent  of 
salary  (all  members  contribute  at  the  same  rate  irrespective 
of  their  age  or  sex)  will  provide; 

(b)  a  pension  from  the  state  of  an  amount  equal  to  the 
annuity  and 

(c)  an  additional   pension,   if   the  teacher   is   a  present 
teacher,  of  i  1/3  per  cent  of  his  average  salary  of  last  10  years 
multiplied  by  the  number  of  years  of  prior  service.     Optional 
retirement  is  provided  after  36  years  of  service  irrespective  of 
age,  but  only  on  an  actuarial  equivalent  of  his  benefit  at  that 
time,  i.e.  usually  on  a  greatly  reduced  benefit. 

In  order  that  the  retirement  allowances  in  rural  districts 

283 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

might  not  fall  below  the  level  of  subsistence,  it  is  provided  that 
no  teacher  retiring  after  36  or  more  years  of  service  shall  re- 
ceive less  than  $25  per  month  and  that  in  no  case  shall  the  re- 
tirement allowance  of  a  teacher  who  was  a  member  of  a  local 
pension  fund  at  the  time  of  the  enactment  of  the  new  law  be 
less  than  the  amount  which  he  would  have  received  under  the 
provisions  of  the  local  fund. 

The  retirement  allowances  produced  are,  especially  in  the 
case  of  new  entrants,  smaller  than  the  retirement  allowances 
of  either  the  New  York  City  or  New  Jersey  systems.  In  the 
case  of  women  teachers  and  especially  those  entering  the  service 
at  a  late  age  the  allowances  reach  a  rather  low  level,  (even 
lower  than  in  Pennsylvania)  as  may  be  seen  from  the  follow- 
ing table.  The  system  would  have  been  much  more  equitable 
and  efficient  had  the  rates  of  contributions  been  graduated  ac- 
cording to  age  and  sex,  instead  of  being  fixed  at  the  same 
flat  rate  for  all,  irrespective  of  their  different  status. 

RETIREMENT  ALLOWANCES  EXPRESSED  AS  PERCENTAGES  OF 
THE  AVERAGE  SALARY  OF  LAST  IO  YEARS  IN  CASE  OF  NEW  EN- 
TRANTS ENTERING  AT  VARIOUS  AGES  AND  RETIRING  AT  60  (THE 
ALLOWANCE  CONSISTS  OF  AN  ANNUITY  PROVIDED  BY  A  CON- 
TRIBUTION OF  4  PER  CENT  OF  SALARY  AND  OF  A  PENSION  OF 
AN  EQUIVALENT  AMOUNT). 

Percentage  Allowable  to 

Age  of  Entrance  Men  Teachers  Women  Teachers 

Per  Cent  Per  Cent 

20  59-94  50-33 

21  57.65  48.80 

22  56.20  47.00 

23  54-65  45-70 

24  53-25  44-20 

25  51.72  42.82 

26  50.00  41.20 

27  48.25  39-75 

28  46.55  38.35 

29  44.80  36.85 

30  42-81  35.09 

284 


NEW  JERSEY,  OHIO  AND  VERMONT 

RETIREMENT  ALLOWANCES  (CONTINUED) 

31  4i-oo  33.55 

32  39-35  32-oo 

33  37-50  30.50 

34  35-85  29.00 

35  3376  27.50 

36  32.20  26.00 

37  30-45  24.75 

38  28.55  23.25 

39  26.90  21.95 

40  25.17  20.41 

41  23.50  19.20 

42  21.90  17-90 

43  20.30  16.50 

44  i8.75  I5-30 

45  I7-38  14-07 

It  must  be  noted  that  the  contributioins  are  made  on  the  basis 
of  a  salary  not  exceeding  $2,000.  The  higher  paid  teachers 
and  school  officials  will  therefore  receive  allowances  of  smaller 
proportion  to  their  salary  than  others. 

In  case  of  disability  after  10  years  of  service,  the  teacher  is 
entitled  to  a  retirement  allowance,  including  his  annuity  and 
pension  of  1/5  per  cent  of  his  average  salary  of  the  last  10 
years  for  each  year  of  service,  with  a  minimum  of  30  per  cent 
of  salary,  and  a  maximum  of  90  per  cent  of  the  retirement 
allowance  to  which  he  would  have  been  entitled  at  60.  A 
teacher  retiring  at  50  or  55  years  of  age  after  30  years  of  ser- 
vice will  be  entitled  to  a  disability  allowance  of  36  per  cent  of 
his  salary.  On  retiring  after  35  years  of  service  he  will  re- 
ceive 42  per  cent. 

A  credit  for  service  rendered  in  public  schools  of  other 
states  is  allowed  only  to  present  teachers  and  only  on  condition 
that  the  teacher  cover  the  entire  cost  of  such  credit.  When  a 
present  teacher  leaves  the  service,  his  prior-service  certificate 
becomes  void  and  not  renewable.  Both  of  these  features  are 
open  to  criticism.  The  provisions  of  the  New  Jersey  systems 
are  more  satisfactory  in  this  respect. 

285 


TEACHERS'    PENSION    SYSTEMS    IN  '  THE    UNITED    STATES 

In  cases  of  resignation  or  dismissal  the  teacher  or  his  repre- 
sentatives are  to  receive  all  his  contributions  with  interest  at 
4  per  cent  ten  years  after  the  resignation  or  dismissal.  This 
deferred  refund  is  a  novel  feature.  In  the  absence  of  any  ex- 
perience with  this  feature  it  is  difficult  to  say  whether  or  not  it 
is  practicable  and  will  satisfy  the  teachers. 

In  cases  of  death  before  retirement  the  teachers'  contribu- 
tions with  interest  are  paid  to  his  legal  representatives  at  any 
time.  Optional  benefits  similar  to  those  of  other  systems  are 
provided. 

The  body  employing  the  teacher  pays  each  year  on  account 
of  each  teacher  a  certain  "normal  contribution"  which  is  fixed 
at  such  a  percentage  of  salary  as  will  provide  the  teacher  with 
a  pension  equal  to  his  annuity,  and  a  certain  "deficiency  con- 
tribution" also  expressed  as  a  percentage  of  salary  to  cover 
on  a  reserve  basis  the  accrued  liabilities  of  the  system.  The 
immediate  cost  to  the  employers  will  be  approximately  5.6 
per  cent  of  salary  (2.8  per  cent  normal  contribution  and  2.77 
per  cent  deficiency  contribution). 

The  total  assets  and  liabilities  of  the  system  are  as  follows. 

LIABILITIES  ASSETS 

Superannuation  Teachers'  Contri- 

Allowances  for  butions   $13,360,924 

future  service.  .$14,750,336     Employers'     Con- 
Additional  Allow-  tributions    ....   25,296,805 

ances 11,536,085 

Disability    Allow-  Total  . .' $38,657,729 

ances 8,492,001 

Refund 3,879,307 


Total $38,657,729 

The  system  is  managed  by  a  retirement  board  consisting  of 
five  members:  the  state  superintendent  of  public  instruction, 

286 


NEW  JERSEY,  OHIO  AND  VERMONT 

the  state  auditor  and  three  teacher  members  elected  by  the 
members  of  the  system.  The  teachers  have  therefore  a  ma- 
jority voice  in  the  board — a  feature  which  can  hardly  be  ap- 
proved in  view  of  the  fact  that  the  major  part  of  the  moneys 
of  the  system  are  government  funds  and  the  system  vitally 
affects  public  interest  and  is  largely  a  government  function. 

The  provisions  regarding  the  merger  of  local  funds  with 
the  state  system  is  somewhat  different  than  in  Pennsylvania. 
If  a  majority  of  the  members  of  a  local  pension  fund  vote  in 
favor  of  a  merger  with  the  state  system  and  the  board  of  ed- 
ucation approves  it,  then  the  fund  is  merged  under  the  follow- 
ing conditions:  an  actuarial  valuation  of  the  fund  is  made  and 
its  accrued  liabilities  and  the  deficiency  contribution  necessary 
to  cover  the  latter  in  case  of  a  merger  are  determined;  all  the 
assets  and  the  entire  membership  of  the  fund  are  transferred 
to  the  state  which  then  assumes  the  payment  of  all  benefits 
already  outstanding  or  maturing  under  the  new  law  in  the 
future,  but  the  locality  must  pay  to  it  the  deficiency  contribu- 
tion determined  by  the  valuation. 

The  system  consists  of  the  following  funds:  the  teachers' 
savings  fund;  the  employers'  accumulation  fund,  in  which  all 
contributions  of  the  localities  are  accumulated;  the  annuity 
and  pension  reserve  fund,  to  which  the  reserves  are  transferred 
on  retirement  and  from  which  annuities  and  pensions  are  paid ; 
the  guarantee  fund  for  the  purpose  of  maintaining  uniform  in- 
terest and  for  special  requirements ;  and  the  expense  fund. 

Vermont.  In  the  year  1913  a  law  was  passed  in  Vermont 
establishing  there  a  teachers'  retirement  fund.  The  funds  for 
its  financing  were  to  be  raised  by  the  Teachers'  Retirement 
Fund  Association.  The  state  was  to  contribute  an  amount 
equal  to  that  raised  by  the  teachers,  not  exceeding,  however, 
$10,000  annually.  Annuities  of  half  pay,  maximum  $500, 
were  to  be  paid  to  members  who  retire  after  attaining  65  years 
of  age.  In  cases  of  premature  disability  the  retirement  board 

287 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

was  to  grant  such  an  amount  as  it  saw  fit.  The  board  was 
authorized  to  pay  no  annuities  until  in  its  judgment  the  fund 
was  sufficient,  or  to  pay  only  reduced  annuities,  or  to  give 
preference  to  certain  classes.  Approximately  only  fifty  teach- 
ers out  of  a  total  of  almost  two  thousand  joined  the  fund. 
No  annuities  were  paid.  It  was  evident  that  the  law  was 
entirely  inadequate  to  solve  the  teachers'  retirement  problem. 

Efforts  were,  therefore,  made  to  secure  more  satisfactory 
legislation.  The  assistance  of  the  Carnegie  Foundation  was 
invoked  and  a  new  retirement  plan  was  evolved  and  incorpor- 
ated in  a  bill  ( Senate  63 )  which  was  introduced  in  the  legisla- 
ture of  1919.  After  being  amended  in  several  respects  it  was 
passed  and  became  a  law  on  April  8,  1919. 

The  new  law  authorized  the  establishment  of  a  new  retire- 
ment fund.  It  did  not  make  its  establishment  mandatory  as 
the  original  bill  did.  Neither  did  it  make  membership  in  it 
compulsory  for  future  teachers,  as  provided  in  the  original 
draft,  but  made  it  voluntary  for  all. 

The  system  was  intended  to  operate  on  a  permanent  and 
stable  basis.  Unfortunately  the  bill  was  amended  by  the  in- 
sertion of  a  clause  that  "the  total  amount  appropriated  by  the 
state  in  any  one  year  to  carry  out  the  provisions  of  this  act 
shall  not  exceed  the  sum  of  $25,000."  This  sum  will,  of 
course,  be  insufficient  to  finance  the  system  permanently.  If 
the  majority  of  the  teachers  join  it,  it  will  be  insufficient  at 
the  very  outset.  The  system  would,  therefore,  be  placed  in 
the  same  position  as  other  systems  had  been,  which  made 
greater  promises  than  they  could  fulfill  but  expected  to  secure 
amendments  that  would  provide  them  with  additional  rev- 
enues when  the  time  of  stress  would  come. 

All  members  will  contribute  the  same  percentage  of  salary. 
The  exact  rate  will  be  determined  each  year  by  the  retirement 
board.  The  law  merely  provides  that  the  rate  shall  not  be 
over  5  per  cent.  The  minimum  contribution  is  $16  and  the 
maximum  $100.  After  contributing  for  thirty  years  a  mem- 

288 


NEW  JERSEY,  OHIO  AND  VERMONT 

ber  may  exercise  his  option  as  to  whether  or  not  to  continue 
contributing.  In  adopting  the  uniform  rate  rather  than  one 
graduated  according  to  age  the  f ramers  of  the  system  followed 
the  example  of  Massachusetts  rather  than  that  of  the  New 
York  City,  Pennsylvania  or  New  Jersey  systems.  The  rigid- 
ity of  the  uniform  rate  which  produces  excessive  benefits  in 
case  of  early  entrants  and  inadequate  benefits  in  case  of  late 
entrants,  and  especially  in  case  of  women,  has  been  pointed 
out  in  chapter  IX  and  in  the  preceding  section  on  the  Ohio 
law  and  needs  no  further  comment. 

The  law  does  not  make  it  mandatory  upon  the  state  to  con- 
tribute, as  other  pension  laws  do.  It  says  that  besides  the 
members'  contributions,  the  annuity  fund  "shall  also  consist 
of  such  amounts  as  may  [not  shall,  as  in  other  laws]  be  appro- 
priated from  time  to  time  by  the  general  assembly  on  estimates 
submitted  by  the  retirement  board."  These  estimates  shall 
call  for  an  appropriation  "sufficient  to  enable  the  board  to 
credit  annually  to  each  member  ...  a  sum  equal  to  his 
contributions  to  the  annuity  fund  and  the  additional  allow- 
ance. .  .  .  Provided,  however,  that  the  state  shall  not  be 
called  upon  to  pay  into  said  annuity  fund  more  than  $100  in 
any  year  on  account  of  the  contributions  of  any  member 
.  .  .  nor  shall  the  total  amount  appropriated  by  the  state 
in  any  one  year  to  carry  out  the  provisions  of  this  act  exceed 
the  sum  of  $25,000."  The  state  can  therefore  at  any  time 
disregard  the  estimates  of  the  retirement  board,  reduce  its 
contributions  or  even  altogether  cease  to  contribute.  The 
system  can  never  be  sure  of  its  income. 

Any  member  who  has  reached  the  age  of  60,  if  a  man,  and 
65,  if  a  woman,  and  who  has  served  for  30  years  in  the  public 
schools,  20  of  which  must  have  been  in  the  state,  may  retire 
on  his  own  request  or  may  be  retired  upon  the  request  of  his 
employer  "without  forfeiting  any  of  the  benefits  of  the  retire- 
ment system."  The  latter  sentence  is  rather  queer,  for  it  is 
hard  to  conceive  how  the  benefits  of  a  retirement  system  could 

289 


be  forfeited  on  retirement.  The  wisdom  of  such  a  combined 
old  age  and  long  service  requirement,  as  here  provided,  may 
be  questioned.  Experienced  and  leading  teachers  invited  from 
another  state  may  hesitate  to  enter  the  Vermont  service  after 
they  have  passed  the  40  or  45  year  mark  if  they  know  that 
because  of  the  service  requirement  they  would  have  to  serve 
there  beyond  the  superannuation  age.  It  would  not  be  ad- 
vantageous for  the  state  to  force  late-comers  to  serve  beyond 
the  time  of  their  usefulness.  The  tendency  of  today  reflected 
in  most  of  the  recent  systems  is  to  encourage  desirable  migra- 
tion of  teachers  and  take  age  as  the  basis  for  superannuation, 
without  regard  to  length  of  service. 

The  retiring  member  receives  an  annuity  of  such  amount 
as  his  and  the  state's  contributions  will  provide  on  the  basis  of 
the  McClintock  3^  per  cent  table.  To  provide  against  the 
inadequacy  of  the  annuities  in  case  of  present  old  teachers, 
the  law  allows  those  of  them  who  have  entered  after  45  years 
of  age  "such  an  additional  allowance  from  the  state  as  may 
be  provided  by  the  retirement  board"  provided  that  "the  total 
annuity  shall  not  exceed  one  half  of  his  average  salary." 
Present  teachers  entering  at  the  age  of  42,  43  or  44  would 
not  be  entitled  to  additional  allowances  when  they  retire,  al- 
though their  regular  annuity  especially  in  the  case  of  the 
women  retiring  at  60  would  be  far  below  half  pay.  It  may 
be  more  advantageous  for  them  to  postpone  joining  the  system 
until  they  reach  the  age  of  45 — a  point  which  may  undoubted- 
ly raise  some  confusion.  No  provision  is  made  for  future 
teachers  entering  at  a  late  age,  although  their  regular  annui- 
ties would  also  be  inadequate.  The  entire  method  of  selecting 
the  present  teachers  above  45  for  the  enjoyment  of  the  addi- 
tional allowance  appears  rather  arbitrary.  The  broad  discre- 
tion left  to  the  board  to  determine  in  their  case  the  amount  of 
the  additional  allowance  and  the  uncertainty  in  which  in  the 
meanwhile  this  class  of  members  may  be  left  as  to  the  amount 
of  their  benefit  is  hardly  a  good  feature. 

290 


NEW  JERSEY,  OHIO  AND  VERMONT 

Retirement  for  disability  may  take  place  any  time  after  6 
years  of  service.  But  the  disability  is  required  to  be  "total 
and  permanent."  The  permanency  of  disability  for  teaching 
is  very  difficult  to  determine.  For  this  reason  most  of  the 
scientific  systems  do  not  make  such  requirements  but  provide 
for  periodical  examinations,  and  reduction  or  discontinuance 
of  the  allowance,  in  case  the  disability  decreases  or  altogether 
ceases  and  the  teacher  is  partly  or  entirely  reinstated.  As  the 
annuity  of  the  retired  member,  purchased  by  the  contributions 
accumulated  to  his  credit,  would  frequently  be  insufficient, 
the  law  provides  for  him  such  additional  annual  allowance 
from  the  state  "as  the  retirement  board  in  the  exercise  of 
sound  discretion,  shall  deem  equitable,  the  same  being  limited 
by  his  earning  capacity  in  other  occupations."  This  additional 
allowance  is  to  be  continued  "so  long  and  in  such  amount 
as  the  retirement  board  may  determine,  but  in  no  event  shall 
the  total  sum  received  annually  by  such  member  exceed  half  of 
the  average  annual  salary  throughout  his  entire  period  of 
service."  No  other  board  of  any  other  system  is  known  to 
exercise  as  wide  a  discretion  in  this  matter.  It  is  generally  con- 
ceded that  rules  ought  to  take  place  of  discretion.  In  the  ab- 
sence of  such  rules,  in  this  instance,  every  applicant  would 
claim  the  maximum  disability  benefit  of  half  pay  (exceeding, 
perhaps,  the  superannuation  benefit  to  which  he  might  have 
entitled  had  he  stayed  in  the  service)  on  the  ground  that  some 
one  else  has  received  it  and  the  board  may  be  greatly  inconven- 
ienced by  such  claims,  especially  as  refusals  would  lead  to 
accusations  of  unfairness. 

In  case  of  resignation,  dismissal  or  death  before  retirement 
the  original  draft  of  the  bill  provided  a  refund  of  the  mem- 
ber's contributions  with  interest,  if  the  withdrawal  or  death 
occurred  before  6  years  of  service,  and  of  both  the  member's 
and  the  state's  contributions  with  interest,  if  withdrawal  or 
death  occurred  after  6  years  of  service.  The  intention  was  to 
go  further  than  any  other  system  along  this  line,  as  the  furthest 

291 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

that  the  other  systems  have  gone  is  to  refund  the  member's 
contributions  with  interest.  The  intention  was  excellent  but 
was  apparently  not  fully  thought  out.  The  feature  was  pro- 
posed and  incorporated  in  the  original  plan  without  any  care- 
ful actuarial  estimate  of  its  cost,  although  it  was  evident  that 
the  cost  would  be  considerable.  Its  great  cost  was  bound  to 
affect  unfavorably  the  retirement  benefits,  the  adequacy  and 
sound  financing  of  which  it  is  exceedingly  difficult  to  realize  in 
the  beginning  of  the  operation  of  a  system,  when  the  accrued 
liabilities  are  tremendous. 

The  program  was  partially  thwarted  as  an  amendment  of 
the  bill  struck  the  interest  out.  The  result  is  precarious.  As 
the  largest  proportion  of  withdrawals  occur  before  6  years  of 
service,  the  largest  proportion  of  withdrawing  teachers  would 
receive  only  their  contributions  without  interest,  i.e.  less  than 
the  members  of  the  New  York  City,  Pennsylvania,  New  Jersey, 
Massachusetts  and  Connecticut  systems,  which  started  with  a 
less  ambitious  program,  would  receive  under  similar  circum- 
stances. Those  withdrawing  between  6  and  30  years  of  service 
would  receive  more  than  a  refund  of  their  contributions  with 
interest  would  have  provided  them.  Finally,  in  case  of  those 
withdrawing  after  30  years,  the  combined  member's  and 
state's  contributions  without  interest  would  approximately 
equal  or  even  amount  to  less  than  the  member's  contributions 
with  interest  would  have  amounted  to,  because  interest  doubles 
a  deposit  in  approximately  30  years. 

At  the  time  of  retirement  the  member  may  elect  to  receive 
a  smaller  annuity  with  the  provision  that  if  he  dies  before  re- 
ceiving payments  equal  to  the  sum  of  his  and  the  state's  contri- 
butions accumulated  on  his  account,  the  difference  shall  be 
paid  as  annuity  to  his  legal  representatives.  In  case  of  death 
of  a  disability  beneficiary  who  receives  in  the  form  of  an 
annuity  less  than  the  total  accumulations  of  his  and  the  state's 
contributions  on  his  account,  the  difference  is  paid  to  his  legal 
representatives. 

292 


NEW  JERSEY,  OHIO  AND  VERMONT 

The  system  is  administered  by  the  retirement  board  consist- 
ing of  the  commissioner  of  education,  the  state  treasurer,  the 
insurance  commissioner  and  two  members  elected  by  the  mem- 
bers of  the  retirement  system. 

The  system  consists  of  the  following  funds: 

1.  An  annuity  fund  in  which  the  contributions  of  the  mem- 
bers and  like  contributions  of  the  state  together  with  interest 
shall  be  deposited  and  from  which  the  annuities  and  the  re- 
funds shall  be  paid. 

2.  A  reserve  fund,  consisting  of  gifts,  returns  to  the  state 
of  its  contributions  to  the  annuity  fund,  and  balances  accruing 
from  interest,  etc.,  and  which  shall  be  used  in  the  discretion 
of  the  board  for  unforseen  contingencies,  expenses  of  admin- 
istration or  other  purposes. 

3.  Accrued  liabilities  fund,  consisting  of  the  moneys  re- 
maining from  the  old  retirement  fund,  of  such  parts  of  reserve 
fund  as  the  board  may  transfer  thereto  and  such  other  funds 
as  the  board  may  receive  for  the  purposes  of  meeting  accrued 
liabilities.     This  fund  shall  be  drawn  upon  from  time  to  time 
as  needed  to  make  up  the  contributions  of  the  state  to  the  re- 
tirement allowances. 

Actuarial  revaluations  are  provided  every  three  years  and 
the  board  is  empowered  to  change  rates  of  members'  contribu- 
tions, except  that  such  changes  could  not  affect  teachers  who 
are  members  at  that  time,  unless  they  assent  to  such  changes. 

It  is  to  be  regretted  that  no  actuarial  valuations  of  the  obli- 
gations of  the  system  were  made  when  the  bill  was  framed. 
The  total  cost  of  the  scheme  was  practically  unknown.  The 
systems  of  New  York  City,  Pennsylvania,  New  Jersey  and 
Ohio  at  the  time  they  were  proposed  were  accompanied  by 
valuations  which  clearly  set  before  all  the  parties  concerned 
the  cost  of  the  benefits  involved.  It  is  a  sound  practice  and 
should  have  been  followed.  Unfortunately,  too  many  factors 
were  left  uncertain.  The  rate  of  additional  allowances,  the 
rate  of  normal  contributions  of  the  members  and  of  the  state, 

293 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

the  rate  of  interest,  and  the  mode  of  discharging  accrued  liabil- 
ities— all  this  was  left  for  later  determination,  instead  of  being 
agreed  upon  before  enactment,  and  made  a  valuation  of  assets 
and  liabilities  impossible.  It  was  not  surprising,  therefore, 
that  acting  more  or  less  blindly  in  this  matter  the  legislators 
introduced  in  the  bill  an  arbitrary  limitation  of  the  annual 
appropriation  which  would  provide  the  system  with  an  inade- 
quate contribution. 

The  old  law  was  repealed  and  provision  was  made  that  the 
old  fund  shall  be  merged  into  the  new  fund  if  its  members 
vote  in  favor  of  it. 

It  is  to  be  hoped  that  the  defects  mentioned  herein  will  be 
corrected  in  the  course  of  time  and  the  new  system  will  come 
into  accord  with  the  best  precedents  of  scientific  pension  legis- 
lation. 


294 


APPENDICES 

APPENDIX  I 

COMPARATIVE  ANALYSIS  OF  TEACHERS'   PENSION 

SYSTEMS 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


g 

iif-Ail-Slfi'l*!5! 

c 

~a      a 

O                O    °          C3-^'^   CX'—    p    2 

^ 

t 

s  ° 

*S   w         C   S  *         ^  ^*^*^   ^   "         a> 

>—  I 

— 

33  j 

'§<§£ 

o 

a  o  --^S^  S  °  g  °  "  &* 

H 

_t 

D2«'« 

1  I'B  S  f  J  J  |  §-B  S-o'o-'g 

% 

1 

_ 

|«Jijrili^j£SiS 

t*4 

g 

ja 
1 

1 
& 

iii^i^      i-g  J,  ^_g  i  <a_xa-  i_«-T3.2  g.2  O.T3  i.a 

ri 

B 

i 

H 

« 

a 

o 
iz; 

il|1i»i;i  ^flWliilli' 

Q 

0 

&                             O 

s 

**^    £  ,£3    O*^    83 

Ei^-ggaiigi-i^.A 

Q 

a 

g  i,0«  *  E 

S>>"°.2  t*  *'?  §,«~  §  £  g  ^^j 

1 

J2 

|s_«5| 

03    §*T3    §    ^         o  "^   O    O    §    Q 

' 

Bjiiii 

py  111  Iliil 

(O 

-.sglclsJ^i^ll  li-sifl^ll 

(/) 

la 

ERVICE  PENSIONS 

MOUNT  or  PENSION 

J] 

iiJli'e-^i     1  o-§  "'3  ?"B  7)  S  ^"f  s5  1^  2 

^        _<0  a.tS   rt  o-  0.0,-^-^  0  ^  D.&J3  M  >>^  g  &2" 
(B          01    O    3    O 

K 

1 

1.1 

ja  £J23  P"" 
*•  «  o  *  ^-e 

°"Sal&l 

W  j_ 

GO 

•< 

's  ^ 

a  a.S  Q-S:  S 

1 

3 

05  (S 

jilJil 

• 

gw 

§ 

in 

.S"a? 

lsl||| 

if 

**** 

b 

n  •"  "e§ 

i-H  C*5                                                                                                                              S    OJ  -*^-*J    S  ~*J 

<  &5 

• 

C-to 

0    £    g    0    §T3 

J2    W    fl  »C    K    ro 

W    1 

i 

•^                                                                                                                                    9   •  09   MM 

-i 

*~ 

GO 

IF 

O 

o     S.-3 

§ 

*Z 

(O           fl    W 

.§ 

o 

I  & 

b 

0  o 

fe 
j=- 

£ 

153  6§S 

_o^"o  g  S-g-2  g 

c 

^ 

a"5  a 

^t 

M 

3 

0         « 

.2*0  S:    C-o!M  & 
g'S.S-a'°  a"S  " 

•t* 

I 

H 

g 

ra 

£ 

|||s 

g,  !>,  g  ">,:        __  Sj 

1 

~ 

O 

E 

§  a.  25 

a  S  §S'I  ES  — 

S. 

H 

p 

<!                                 |   -q 

ft 

0 

g 

i"o  a 

Sill 

lii^t"s!llF 

i 
« 

01 

O 

i 

a 

S  a  -a  a 

no   •  -  O   Jj  J3  >^        fli  **  fe   2   O 

1 

1 

H 

9  °*>  * 
1          «^ 

^^.lajjjg-jl 

1 

i 

I 

Q 

»1.|«M 

-°'i"  11^^  ^  "^  s 

s 

3 

b"  ' 

«  ** 

rt 

E 

55*0  1  § 

^£" 

g 

rf 

1 

rifl 
-O 
O 

£ 

H 

^^^^ 

H 

Is 

1 

3 

111 

U-JJ1 

•gdj  o'*^  o  -55 

j 

llll 

f3  o  3j     .  ^  rt 

296 


APPENDICES 


s     « 


12 


Minimum 
Length  of 
Service 
(Years) 


II 


S  e  £  £  |  g  i 

SJSog's  g& 

?*      1 


M 


.AS 

,  s~ 


•1    i       f* 


lllllllll 


297 


S  a 

iJ 


jf 

^^a 


as 
tate, 


*5  fl  "S 

I  i^ 

*  s- 

&  «.9 

a  g  E- 

•i  g«g 

§  »K| 


- 


»    "SS' 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


I 


Q 
z 


Q 

V) 


•tote 


SI 


-s-s 


HI 


18 
if* 

ill 


-si 


8.2  IS 
h 


—     C?     Q   - 

CS    0 

•S  Q. 


E  0      g£~  S.S- 


a  Hi 

8£_-5-9 


*O   O." 


«« 

o  E          E  «  j?  S  ^ 


; '-82  8  «• 
P-slI? 

;>  §  0.1  s 


^s 


II 

"^Q 


PS 


--- 


298 


APPENDICES 


9 


"o       feS 


'1. 


o  d  a  o  cs 


*"eQ      )  >» 

- 


- 
q  «  a  ei  co 


M-  O        J3 


c£.2  A* 
3     *f  fl 

t-«l5-Sfc 
js  jl  *  ?..g  s 

l-l-JI  || 

kP-H'S-fe  0.0 

I  ^^ 


's 


II  121 

ca  felU  o. 
*£.£S0 

OC™1  -*J  »^    o 

Z  0 


CO 


S  ". 

HQH 


299 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


Q 

7. 


S  w 
cu  S 

~{/>   en 


S  T 
*"  i 


S 


APPENDICES 


o         „ 

.1.1 1 1 

4  ee  3d  v 


§1^' 
tJhl 


tfg«e|j 

£•9  S  8JJ 


&-.S  .1 
1.-..68J 


M  g  §  a 
*»  '  9'3 

§e§! 
|Bj]1 

111   - 
Ifltini 


i 

Bi 

.3 


sag 


•g -0.2  s-o 

CQ  o  es  o  O 
g  S  0       m 


Ilafr- 


JUIJ- 


301 


II 

al 


APPENDICES 


I 


DETAIL 


Q 

C/5 


w  S 

"in  w 
II 


S 


7| 

S  a 
§8 


..53,5 


a  «  >»  k, 


..  c  S       -Q 

8C  55  ,-.  -r? 
.    -^  P%  o  -5 


•  «"g,^  st 

9          ec-'—J3   ** 


S  t«o«»-'r 


§ 


S 


£     5-E 


i-1 

J.g 


I"1  E 


^•g.s 

rt  w  H 


I       gb- 
^  §    2  °  * 


4  S 


~  «  S 

S  f.| 

9  <0  a 

I  i's 


302 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


K 
ill 


U!J1 


vtem 


B20.2.2SS 


j 


Si  is 

^^§,-5 

-§£- 


i*  s  & 
Ifll 

H 


a 


II 


, 
1 


to-o 
a      oi  o5 

g        OOT3 


•-=  •«»  KM  #tfl 


il 


I|a 

5  a 


303 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


3 

cu 


•S 

w 
Q 


i 

w 

£ 

II 
el 


<s> 


ai 

f  ^  S 


S 


TW 


O 

O 


- 


|i  ills  ill  s 


i||!i 

"""SSt  S^  g^ 


a"?; 
83  1 


,1     fl 

ee-" 
dE 


^41111 

l  a 


3  g 

flit) 


3  S'S-O  ;r  i 


.7;  g.^  g 


3  "-o 


304 


In!  Ill 


is?; 


jrjhgtl 


ii 


£  ".S*;  S.S 


APPENDICES 


jg      E 


l  i 

«M  v-^>  o- 


'•'•^CK^^ci^J". 

m  a  a  o  3  S.-2  £.'5 


".2  §J!  «'i2  l 

' 


-. 

'?  &>S. 


I  c"o'F  S 
IJ     J§fc 


sg 

Igft 


i_   Ci."ti 

O  O  £   * 

3  b 


«ja, 


«     I  il  n  Islll  I  Mfli  "111  III. 

|£  •<  55 


305 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


s 

cu 


zs 
S  w 
PL<& 

"co  tfl 

«  V, 

w  ^ 

<5 

H 


S 


H 
u 


0 

u 


gg'S 


'"'•S  o  gS 
Sh«^! 


jj  S  o  0*0*0 

Ji'l&i  >. 


^  *    "** 


2  i  g  • 


306 


B     d 


MB 


-  a  s 

1 


•i'S 


§111 


FiJ 

3    ?r 


•g  S      cp-5 

eS  7  a  w  h 

lllll 

^  ^-p  c  o. 

g.2  rt'g  „,- 

Illig 

'IgJlb 


APPENDIX 

REFERENCES  TO  LAWS,  STATISTICAL  REPORTS, 

ETC.,  RELATIVE  TO  ALL  THE  TEACHERS' 

PENSION  SYSTEMS  IN  THE 

UNITED    STATES 

NOTE  :  The  following  contains,  with  respect  to  every  teachers' 
pension  system  now  in  operation  in  the  United  States  (May, 
1918)  a  list  of  the  laws  (including  laws  no  longer  in  force) 
and  statistical  reports  bearing  on  the  system,  as  well  as  of 
all  published  accounts  descriptive  of  it.  In  a  few  cases  defeated 
bills  bearing  on  the  system  have  been  listed  because  of  some 
special  significance. 

The  arrangement  is  alphabetical,  by  states,  local  systems 
being  listed  alphabetically  under  the  several  states. 

Where  not  otherwise  indicated,  the  figures  giving  the  num- 
ber of  teachers  embraced  in  the  several  systems  are  for  the 
year  1915-1916,  and  are  taken  from  the  report  of  the  United 
States  Commissioner  of  Education  for  1917. 

Valuable  synoptic  information  relative  to  the  provisions  of 
most  of  the  systems  is  contained  in  analytical  tables  and  charts 
which  have  been  published  in  various  reports  and  monographs 
on  this  subject.  Nine  of  these  tables  are  listed  below,  and  a 
Roman  number  assigned  to  each.  References  are  made  in 
the  body  of  the  appendix  to  these  charts  by  these  numbers, 
such  references  being  in  every  case  given  under  the  heading — 
"Analyzed  in  Comparative  Charts." 

List  of  Comparative  Charts 

I.  Review  of  Reviews.     June,  1897.     v.   15,  p.  710-11. 
II.  U.  S.  Bureau  of  Education.    Teachers  pensions.     1908. 
p.  13-15.    (6oth  Cong.,  2d  sess.    Senate.    Doc.  585. 
Serial  no.  5407) 

III.  U.  S.  Bureau  of  Labor.  Pension  funds  for  municipal 
employees,  etc.  1910.  p.  14-35.  (6ist  Cong.,  2d 
sess.  Senate  Doc.  427.  Serial  no.  5658) 

307 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

IV.  Massachusetts.     Board  of  Education.     Special  report 
on  teachers  retirement  allowances.     1913.   p.  33-41. 
(House.    Doc.  1913,  no.  1926) 
V.  Journal  of  Education.    June,  1913.    v.  77,  p.  705;  July, 

1913,    v.  78,  p.  20. 
VI.  Prosser,  C.  A.    The  teacher  and  old  age.    1913.  p.  120. 

Appendix  B. 

VII.  National  Education  Association  of  the  U.  S.  Committee 
on  teachers'   salaries  and  cost  of  living.     Report. 

1913.  p.  272-81. 

VIII.  Massachusetts.      Commission    on    Pensions.      Report. 

1914.  p.  312-31.     (House.    Doc.  1914,  no.  2450.) 
IX.  Carnegie  Foundation  for  the  Advancement  of  Teach- 
ing.   Annual  report,    v.  10,  1915,  p.  86-99. 

Abbreviations  used  to  indicate  books  referred  to  frequently 
and  library  reference  marks : 

Bur.  Ed.  Bull.  1908.  Bureau  of  Education  (U.  S.)  Bul- 
letin 1908,  No.  7.  N.  Y.  Libr. 

Bur.  Ed.  Bull.  1916.  Bureau  of  Education  (U.  S.)  Bul- 
letin 1916,  No.  14,  State  pension  systems  for  public  school 
teachers.  Prepared  for  the  Natl.  Educ.  Assn.  by  Carson 
Ryan  and  Roberta  King.  37  p. 

Bur.  Lab.  Bureau  of  Labor  (U.  S.)  Report  on  Pension 
Funds  for  Municipal  employees  and  railroad  pension  systems. 
In  the  U.  S.  Senate,  Doc.  No.  427,  6ist  Cong.,  2d  Sess.,  1910. 

Cam.  Found.  Carnegie  Foundation  for  the  Advancement 
of  Teaching.  Annual  reports  (1906-1915)  v.  I-X. 

Com.  Ed.  Commissioner  of  Education  (U.  S.)  Washing- 
ton, D.  C.  Annual  Reports,  in  2  volumes. 

Ed.  Rev.  Educational  Review.  Monthly  ed.  by  N.  M. 
Butler,  New  York. 

Jour.  Ed.     Journal  of  Education,  Boston. 

Mass.  Bd.  Ed.  Massachusetts  Board  of  Education.  Spe- 
cial report  on  teachers'  retirement  allowances,  Jan.,  1913, 
47  p.  In  Mass.  House  Docs.  1913,  No.  1926. 

Mass.  Com. — Old  Age  Pens.  Mass.  Commission  on  Old 
Age  Pensions,  Annuities  and  Insurance,  Jan.,  1910.  In  Mass. 
House  Docs.  1910,  No.  1400. 

Mass.  Com.  Pens.  Massachusetts  Commission  on  Pensions, 
Report  1914,  March  16.  In  Mass.  House  Docs.  1914,  No. 
2450. 

308 


APPENDICES 

N.  Ed.  Assn.  National  Education  Association.  Report 
of  the  Committee  on  teachers'  salaries  and  cost  of  living,  Jan., 
1913,  326  p. 

N.  Ed.  Assn.,  1905.  National  Education  Association.  Re- 
port of  the  Committee  on  salaries,  tenure  and  pensions,  July, 
1905,  465  p. 

N.  Ed.  Assn.  Proc.  National  Education  Association. 
Journal  of  Proceedings  and  addresses  of  annual  meetings. 
N.  Y.  Libr.— SSA. 

N.  Y.  Com.  Pens.  Teach.  Ret.  N.  Y.  Commission  on  Pen- 
sions. Report  on  the  Teachers'  Retirement  Fund,  N.  Y.  1915. 
N.  Y.  Libr. 

Sen.  Doc.  585.  Senate  Document  (U.  S.)  585,  6oth  Cong. 
2d  sess.,  1908-09.  Teachers'  Pensions.  N.  Y.  Libr. 

Prosser.  C.  Prosser.  The  teacher  and  old  age,  Riverside 
Educational  Monographs,  1913,  139  p.  N.  Y.  Libr.  SIW. 

Rev.  of  Rev.  Review  of  Reviews,  (New  York)  Monthly 
ed.  by  Albert  Shaw.  N.  Y.  Libr.  DA. 

ARIZONA 

ARIZONA    TEACHERS'    RETIREMENT    SYSTEM.      Established 

1912. 

Number  of  Teachers,  1,539.     Non-contributory. 
Laws 

Sess.     Laws  1912,  ch.  95. 

Establishing    a    non-contributory    state-wide    system, 
repr.  in  Ar.  Sch.  L.,  1913,  ch.  XVI,  p.  63-4  and  in  N. 
Ed.  Assn.,  p.  282. 
Descriptions 

Comm.  Ed.  1912,  v.  i,  p.  65. 

Describes  merits  of  the  1912  schemte. 
Analyzed  in  comparative  charts  (Act.  1912),  VII,  VIII,  IX. 

CALIFORNIA 
CALIFORNIA      TEACHERS'      RETIREMENT      SALARY     FUND. 

Established  1913. 

Number  of  Teachers,  15,702.     Contributory. 
Laws 

Sess.  Laws  1895,  cn-  J66,  March  26.  Establishing 
voluntary  system;  repr.  in  Comm.  Ed.  1894-95,  p. 
1100-02.  Amendments:  1897  March  29;  1901  March 
31;  1903  March  20;  1909  March  n;  1911  March  I. 

309 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Law  1895  reprinted  in  amended  form  in  Cal.    Sch.  L. 
1911,  p.  285-302  and  in  N.  Ed.  Assn.,  p.  282.     1913, 
ch.  694,  March  26  (establ.  state-wide  system). 
Assembly  Bill,   No.    1263,   ch.   694,   7  p.    (text  of   the 

law  1913) 
Reports  and  statistics 

Biennial  Reports,  1913-14,  1915-16.    Contains  financial 
statement  and  list  of  annuitants. 
Descriptions 

Lange,  A.  A.,  A  proposal  for  a  state  retirement  system. 
In  Sierra  Educational  News    (San  Francisco)   Dec., 
1909,  p.  22-26. 
Comm.  Ed.,  1909,  v.  I,  p.  117.      (Describes  amendm. 

1909)  1913,  v.  i.  p.  914.     (Describes  law,  1913). 
Carn.  Found.,  1912,  p.  34.     (Description  of  pens,  bill) 

1914,  p.  30.     (Brief  description  of  new  system). 
Analysed  in  comparative  charts  (Act  1913)  ;  IV,  VI,  VII, 

VIII,  IX. 

For  a  history  and  criticism  of  this  fund,  see  p.  195. 
SAN  FRANCISCO  RETIREMENT  FUND.    Established  1897. 
Number  of  Teachers,  1,621.     Contributory. 
Laws 

See  under  California;  laws  1895-1911. 
Descriptions 

Comm.  Ed.,  1903-04,  v.  2,  p.  2281-82. 
N.  Ed.  Assn.,  1905,  p.  183. 
Analyzed  in  comparative  charts  III,  IV. 

COLORADO 

DENVER  TEACHERS'  RETIREMENT  FUND.    Established  1909. 
Number  of  Teachers,  1,095.     Non-contributory. 
Laws 

Sess.  Laws  1909,  ch.  214,  May  5.     Permissive  for  ist 
class  district  to  establish  retirem.  fund ;  repr.  in  N.  Ed. 
Assn.,  p.   291;  also  in   Colo.   School   Law,    1915,  p. 
191-92. 
Reports  and  statistics 

Report  of  the  School  District,  No.  I,  1913-1914,  p.  22-23. 

Statement  of  receipts  and  disbursements. 
Analyzed  in  comparative   charts    (Act    1909) ;   IV,   VII, 

VIII,  IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  219. 

310 


APPENDICES 

CONNECTICUT 

CONNECTICUT  TEACHERS'  RETIREMENT  FUND.     Established 

1917 

Number  of  Teachers,  5,525.     Contributory. 
Laws 

Spec.  Sess.  Laws  1899,  ch.  123,  May  17.    Incorporating 

the  Conn.  Teachers'  Annuity  Guild. 
Publ.    Sess.    Acts    1907,    ch.    373,   July    n.      Appropr. 
$10,000  for  the  Conn.  Teachers'  Annuity  Guild  for 
two  years. 

Also  see  under  New  Haven  and  New  London. 
Senate  Bill  No.  61,  1915.     In  Conn.  School  Document, 

No.  4,  1915,  p.  58-61. 

Proposed    a   state-wide,    non-contributory    system;    was 
passed  by  the  legislature,  but  vetoed  by  the  governor 
on  the  ground  of  being  unconstitutional. 
Acts  1917,  ch.  411,  establishing  a  state-wide  system. 
For  a  history  and  criticism  of  this  fund,  see  p.  239. 
NEW  HAVEN  TEACHERS'  PENSION  FUND.    Established  1911. 
Number  of  Teachers,  779.     Contributory. 
Laws 

Spec.  Sess.  Acts,  191  L;  July  18. 

Special  act  amending  charter  and  establishing  fund  in 
New  Haven. 
Analyzed  in  comparative  charts  (Act  1911)  :  IV,  VII,  VIII, 

IX. 

NEW  LONDON  TEACHERS'  PENSION  FUND.    Established  1911. 
Number  of  Teachers,  119.     Contributory. 
Laws 

Publ.  Sess.  Acts,  1911,  No.  461.     (Establ.  fund  in  New 

London. ) 
Analyzed  in  comparative  charts;  VII,  VIII. 

DELAWARE 

WILMINGTON  TEACHERS'  RETIREMENT  FUND.     Established 

1911. 

Number  of  Teachers,  377.     Contributory. 
Laws 

Sess.  Laws,  1911,  ch.  208.     (Establ.  fund  in  Wilming- 
ton) 1913,  ch.  210,  amending  law,  1911. 

3" 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Descriptions 

Comm.  Ed.  1911,  v.  I,  p.  99.      (Describes  law  1911.) 
Analysed  in  comparatice  charts   (Act   1911):  VII,  VIII, 
IX. 

DISTRICT   OF   COLUMBIA 
Laws 

A  Bill  to  Establish  a  P.S.  Teachers'  Retirement  Fund 

in  the  District  of  Columbia.     H.R.  18295,  61  Cong., 

2nd  Sess.  1910  May  21,  12  p.     (Bill  has  not  passed.) 
Constitution  and  By-Laws  of  the  Teachers'  Annuity  and 

Aid  Association,  Jan.  1915,  40  p.     (Private  fund.) 
Reports  and  statistics 

Teachers'  Retirement  Fund,  Report  No.  13/9,  H.R.  6ist 

Cong.,  1910,  4  p. 
Submitted  in  support  of  the  bill  H.R.  18295,  6ist  Cong., 

2nd  sess. 
Teachers'  Annuity  and  Aid  Association  of  the  District 

of   Columbia.     2ist  and  22nd  annual  meeting,   Jan. 

1915  and  1916,  8-page  folders. 

Report  of  the  treasurer.     Receipts  and  Disbursements. 
Membership. 

Descriptions 

Comm.  Ed.  1909,  v.  i,  p.  120.      (Describes  pension  bill.) 
Cam  Found.   1912,  p.   34.      (Describes  pension  bill  of 
the  Bd.  of  Ed.) 

GEORGIA 

ATLANTA    TEACHERS'    RETIREMENT    SYSTEM.      Established 

1910. 

Number  of  Teachers,  795.     Non-contributory. 
Laws 

Atlanta  Charter  and  Ordinances,  City  Code  1910,  s.  495- 

500.    Establ.  retir.  system  in  Atlanta. 
Sess.  Laws,  1912,  Part  III,  title  i,  No.    619,  act  amend- 

ing sect.  26  of  city  charter. 
Analysed  in  comparative  charts.    VIII. 
COLUMBUS  TEACHERS'   RETIREMENT   SYSTEM.     Established 


Number  of  Teachers,  113.     Non-contributory. 

312 


APPENDICES 

Laws 

Sess.  Laws,  1913,  No.  92,  Aug.  n. 

Also  printed  in  the  Public  School  Laws  of  Columbus, 
Ga.  1914,  p.  8-9  (B.M.R.  Collection)  ;  amendm.  of 
city  charter  providing  for  pensions  to  be  granted  in 
the  discretion  of  the  authorities  after  25  years  of  serv- 
ice; max.  $25  monthly. 

ILLINOIS 

ILLINOIS    TEACHERS'    PENSION    AND    RETIREMENT    FUND. 

Established  1915. 

Number  of  Teachers,  24,947.     Contributory. 
Laws 

Sess.  Laws  1895,  May  31,  p.  312-15. 

Permissive  act  for  cities  over  100,000  pop.  (Chicago) 

repr.    In  Comm.  Ed.  1894-95,  p.  1081-82. 

1901  May  n,  p.  300-01.     (Withdrawing  compulsory 

feature. ) 

1907  May  24,  p.  529-34. 

Mandatory  act  for  cities  over  100,000  pop.  (Chicago) 

new  section  added;  repr.    In.  Bur.  Ed.  Bull.,  p.  147-50. 

1911  June  6,  p.  513-16. 

Permissive  for  cities  of  1,000  to  100,000  pop.;  repr. 

In.  N.  Ed.  Assn.,  p.  292-94. 

1913  June  27,  p.  598-603. 

Special    act    for    cities    of    10,000    to    100,000    pop. 

(Peoria.) 

1915  June  29,  p.  648.    (Amending  1913  act  for  Peoria.) 

1915  May  27,  p.  649-657.    (Establ.  state-wide  system.) 

Also  see  under  Chicago  and  Peoria  laws  1909,  1911, 
^  1913  and  1915. 
State  Teachers'   Pension   and   Retirement   Fund,    1915, 

lo-p.  pamphlet.    Contains  text  of  the  laws  of  1915. 
Bur.  Ed.  Bull.,  p.  150. 

Court  decisions  regarding  compulsion  and  other  fea- 
tures of  the  Chicago  system,  1901-07. 
Attorney  General.    Opinions  re  Teachers'  Pension  Fund. 

In  Educational  Press  Bulletin  (monthly  of  the  Dept. 

of  Publ.  Instruction)  May,  1916,  p.  2-3. 
Descriptions  and  digests 

Cam.  Found.  1915,  p.  52.     (Describing  law  1915.) 

313 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Comm.  Ed.  1903-04,  V.  2,  p.  2282.  (Extr.  from  law 
1901.) 

1907  v.  i,  p.  454.      (Extr.  from  law  1907.) 
1911  v.  i,  p.  98.      (Describing  law  1911.) 

Analysed  in  comparative  charts  IV    (1911);   VII,   VIII 

(1913);  IX  (1915). 
For  a  history  and  criticism  of  this  fund,  see  p.  176. 

CHICAGO    TEACHERS'    PENSION    AND    RETIREMENT    FUND. 
Established  1896. 

Laws 

Number  of  Teachers,  7,992.     Contributory. 

Sess.  Laws  1895,  May  31,  p.  312-15. 
Act  for  cities  over  100,000  pop.;  repr.  in  Comm.  Ed. 
1894-95,  v.  i,  p.  1081. 

1901  May  n,  p.  300-01  amend.  (Withdrawing  the 
compulsory  clause.) 

1907  May  24,  p.  529-34  amend.  (New  sections  added.) 
1909  June  12,  s.  152-165,  p.  384-388  substituting  all 
previous  laws.  Providing  that  interest  on  the  deposits 
of  school  moneys  should  be  devoted  to  the  retir.  fund. 

Sess.  Laws  1911,  June  5  and  6,  p.  511-512;  512  amend. 
L.    1909.      (Requiring  Bd.   of   Ed.   to  contribute  an 
amount  equal  to  teachers'  contributions.) 
1913  June  26,  p.  594-595  amend.  L.  1909.     (Increasing 
contributions. ) 

Board  of  Trustees  of  the  P.  S.  Teachers'  Pensions  and 
Retirement  Fund.  Rules  and  regulations  as  amended 
in  1911,  27-p.  pamphlet. 

Board  of  Trustees.  Rules  and  regulations  in  force  on 
April  17,  1914,  59  p. 

Also  contains  the  text  of  the  law  as  amended  in  1913. 

Reports  and  statistics 

Comm.  Ed.  1898-99,  v.  2,  p.  1478-79. 

Contains  a  report  of  the  teachers'  committee  regarding  the 
conditions  of  the  fund  at  that  time;  statistical  tables. 

Board  of  Trustees  of  the  P.  S.  Teachers'  Pension  and 
Retirement  Fund.  Official  reports  of  regular  and  spe- 
cial meetings,  1909-14,  2-p.  leaflets. 

3H 


APPENDICES 

Descriptions 

Comm.  Ed.  1911,  v.  I,  p.  98. 

Brief   description   of   the   development   of   legislation 
governing  the  Chicago  fund. 
Ed.  Rev.  1902,  Feb.  p.  156. 

Describes  the  campaign  against  compulsion  to  join  the 
fund. 

Analyzed  in  comparative  charts  III,  IV,  VII,  VIII,  IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  220'. 
PEORIA  TEACHERS'  PENSION  AND  RETIREMENT  FUND.  Estab- 

lished 1911. 

Number  of  Teachers,  425.     Contributory. 
Laws 

Sess.  Laws,  1913,  June  27  (Approving  the  establishing 
of  a  fund  in  Peoria). 
1915,  June  29,  p.  649,  amending  law  1913. 
Board  of  Management   ....   Rules  and   regulations 

adopted  Oct.  30,  1913.    2i-p.  booklet. 
Contains  also  the  law  1913  and  by-laws. 
Reports  and  statistics 

Board  of  Management  for  the  Teachers'   Pension  and 
Retirement  Fund  Proceedings  1911-14.    32-p.  booklet. 
Proceedings  of  the  meetings  and  financial  reports. 

INDIANA 
INDIANA  STATE  TEACHERS'  RETIREMENT  FUND.    Established 


Number  of  Teachers,  17,706.     Contributory. 
Laws 

Sess.  Act,  1907,  ch.  170,  March  9. 

(Permissive   for   cities   over    100,000   pop.     [Indian- 
apolis]  to  establ.  p.  funds;  repr.  in  B.  Ed.  Bull.,  p. 

I53-I55-) 

1913,  ch.  77. 

(Permissive  for  cities  of  55,000  to  60,000  pop.    [Terre 

Haute]  to  establish  p.  fund.) 

1913,  ch.  334,  March  15. 

Permissive  for  cities  of  20,000  to  1000,000  pop. 

1915,  ch.  182. 

Establ.  a  State  Teachers'  Retir.  Fund  which  any  dis- 

trict may  join  if  majority  of  teachers  favor  it. 

See  also  under  Indianapolis,  law  1915. 

315 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Joint  Committee,  Indiana  .  .  .  .  A  bill  to  provide  for 
an  Indiana  State  Teachers'  disability  and  retirement 
law.  In  Educator  Journal  (Indianapolis),  1910,  p. 

^  163-70. 

State  Teachers'   Retirement  Law   1915,   22-p.   booklet. 

Text  of  the  law  and  notes. 
Descriptions 

Carn.  Found.   (1912)  p.  34  (Describes  pension  bill). 

1914,  p.  37  (Describ.  laws  1907-1913). 
I91S>  P-  5°  (Describ.  law  1915). 

Comm.    Ed.    1907,    v.    i,    p.    454-56.     (Describes   law 

1907.) 

Analyzed  in  comparative  charts:  VIII  (1913),  IX  (1915). 
EVANSVILLE  (Established  1913;  now  merged  with  the  state 

fund). 
Laws 

See  under  Indiana;  laws  1913  and  1915. 

INDIANAPOLIS    TEACHERS'    PENSION    FUND.      Established 

1907. 
Number  of  Teachers,  1,201.     Contributory. 

Laws 

Sess.  Laws,  1907,  ch.  170,  March  9. 

Permissive  for  cities  over  100,000  pop.  to  establish 
pension  funds;  repr.  in  B.  Ed.  Bull.  p.  153-155,  in 
Ind.  Sch.  L.  1911,  p.  202-211,  in  N.  Ed.  Assn.  p. 
294-298. 

1915,  ch.  66,  Match  5.    (Increasing  city's  contribution.) 
Indianapolis  P.  S.  Teachers'  Pension  and  Disability  Law. 

1 1 -p.  booklet. 

Reports 

Indianapolis  P.  S.  Teachers'  Pension  Fund.    Detailed  re- 
port for  the  seven-year  period,  1907-14,  annual  reports. 
7  typewritten  pages. 
Statistics  of  receipts  and  disbursements. 

Analyzed  in  comparative  charts:  III,  IV,  VII,  VIII  (1907)  ; 
IX  (I9i5). 

SOUTH  BEND  TEACHERS'  RETIREMENT  FUND.     Established 

1914. 
Number  of  Teachers,  340.     Contributory. 

316 


APPENDICES 

Laws 

See  under  Indiana,;  law  1913. 
TERRE  HAUTE  TEACHERS'  RETIREMENT  FUND.     Established 


Number  of  Teachers,  401.     Contributory. 
Laws 

Sess.  Laws,  1913,  ch.  77. 

Permissive  for  cities  of  55,000  to  60,000  pop.  to  estab- 
lish pens,  funds. 

Teachers'  Retirem.  Fund  Law  and  By-Laws.  —  issued  by 
the  Board  of  Commissioners,  1913,  2O-p.  booklet. 
Contains  also  a  table  of  assessments  and  annuities. 
Analyzed  in  comparative  charts  :  VIII,  IX. 

IOWA 

Reports 

State  Teachers'  Association.  —  Committee  of  the  Educa- 
tional  Council.      Pensions  and  Tenure   of   Office   of 
Teachers.    In  its  Proceedings,  1908,  p.  30-34. 
Descriptions 

Carn.  Found.  1914,  p.  35-36. 
Describes  defeated  pension  bill. 

KANSAS 

Laws    See  under  Topeka,  Kans.  ;  law  1911. 
TOPEKA.     Established  1911. 

Number  of  Teachers,  262.     Contributory. 
Laws 

Sess.  Laws,  1911,  ch.  280. 

Permissive  for  ist  class  cities;  repr.  in  N.  Ed.  Assn., 
p.  298. 
Descriptions 

Comm.  Ed.  v.  I,  p.  99  (describes  law  1911). 
Analysed  in  comparative  charts:  VII,  VIII,  IX. 

KENTUCKY 
Laws 

Sess.  Laws,  1912  ch.  129,  March  19  (permissive  for  ist 
class  cities)    1914  ch.   17,  March   14   (establ.  Ins.  & 
Annuity  Fund  for  2nd  class  cities). 
Analyzed  in  comparative  charts:  IX. 

LOUISVILLE   TEACHERS'   INSURANCE  AND   ANNUITY   FUND. 
Established  1912. 

317 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Number  of  Teachers,  883.     Entirely  contributory. 
Laws 

Sess.  Laws,   1912,  ch,   129,  March   19   (permissive  for 

ist  class  cities). 

Analyzed  in  comparative   charts:    (Act    1912)    IV,   VII, 
VIII,  IX. 

LOUISIANA 
NEW  ORLEANS  TEACHERS'  RETIREMENT  FUND.    Established 

1910. 

Number  of  Teachers,  1,294.     Entirely  contributory. 
Laws 

Sess.  Laws  1910,  ch.  116. 

Establ.  Teachers'  Retir.  Fund  for  the  parish  of  N.  Orl. 

1914,  ch.  263. 

Lowering  requirements  from  40  years'  service  to  30 

years'  service  or  age  65. 
Act  No.  116  creating  the  Bd.  of  Trustees  of  the  Teachers' 

Retire.  Fund,  1910,  i6-p.  booklet. 
Act  No.  263  of  the  year  1914  amending  act  No.  116  of 

the  year  1910   .    .    .    .   8-p.  booklet. 
Reports  and  Statistics 

Board   of   Trustees   ....   Annual   reports   of    1914, 

1915,  4-p.  booklet.     Statement  of  receipts,  disburse- 
ments, membership  and  pension  roll. 

Analyzed  in  comparative  charts  III,  VII,  VIII,  IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  218. 

MAINE 

MAINE  SCHOOL  PENSION  FUND.    Established  1913. 
Number  of  Teachers,  6,965.     Non-contributory. 
Laws 

Sess.  Laws,  1913,  ch,  75,  March  19. 

Establ.  state-wide  system ;  repr.  in  State  Supt.'s  Report 
1914,  p.  103-107. 
Application  for  Teachers'   Pensions.     Text  of  the  law 

1913.     Rules  and  regulations.     4-0.  leaflet. 
Descriptions 

Comm.  Ed.  1913,  v.  i,  p.  915.     (Extract  from  law  1913.) 
Carn.  Found.  1912,  p.  33.  (Describes  pension  bill.) 
State  Supt.   Report   1914,  p.    103-107.      (Describes  the 
establishment,  operation  and  effects  of  the  law.) 


APPENDICES 

Analysed  in  comparative  charts  (Act  1913)  V,  VI,  VIII, 

IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  173. 

MARYLAND 

MARYLAND  RETIREMENT  SYSTEM.    Established  1902. 
Number  of  Teachers,  4,277.     Non-contributory. 
Laws 

Sess.  Laws,  1902,  ch.  196,  April  8. 

Establ.  state-wide  discretionary  system. 
1904,  ch.  584,  sec.  58. 

Increasing  appropriation  from  $10,000  to  $25,000. 
1908,  ch.  605,  April  6,  p.  226  amendment. 
1912,  ch.  13,  April  8  amendment. 
Increasing  administr.  discretion  repr.  in  N.  Ed.  Assn. 
p.  304. 
Also  see  under  Allegheny  Co.,  L.  1912;  Baltimore  1908, 

Baltimore  County  1912. 
Descriptions 

Carn.  Found.  1912,  p.  26.     (Describes  law  1908.) 
1914,  p.  25  and  31. 

Describes  the  unsatisfactory  condition  of  the  fund  and 
amendm.  1912. 
Analysed  in  comparative  charts:  III,  IV,  VI  (1902)  ;  VIII, 

IX  (1912). 

ALLEGHENY  COUNTY  TEACHERS'  RETIREMENT  FUND.    Estab- 
lished 1912. 

Laws 

Sess.  Laws,  1912,  ch.  463,  April  8. 

Establ.  Teachers'  Retirm.  Fund  in  Allegheny  County. 

Board  of  Trustees,  Teachers'  Retirem,  Fund  of  the  Alle- 
gheny County,  4-p.  leafl. 
Text  of  act  1912. 

Reports 

Statement  on  the  condition  of  the  teachers'  retirem.  fund 
1915,  1916.  Four  mimeogr.  pages.  (Receipts  and 
disbursements. ) 

Analysed  in  comparative  charts:  VIII. 
BALTIMORE    TEACHERS'    RETIREMENT    FUND.      Established 

1909. 
Number  of  Teachers  2,183.     Contributory. 

319 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Laws 

Sess.  Laws  1908,  ch.  78,  March  12,  p.  595-603. 

Established  Retirement  Fund  for  Baltimore  City. 
Teachers'  Retirement  Bill,  as  passed  by  the  Maryland 

Legislature,  1908-    8p. 

Analyzed  in  comparative  charts    III,  VII,  VIII. 
For  a  history  and  criticism  of  this  fund,  see  p.  214. 
BALTIMORE  COUNTY  TEACHERS'  RETIREMENT  FUND.    Estab- 
lished 1912. 
Laws 

Sess.  Laws,  1912,  ch.  83,  April  i. 

Establ.  Retirem.  Fund  for  Baltimore  Co. 

MASSACHUSETTS 

MASSACHUSETTS  TEACHERS'  RETIREMENT  SYSTEM.     Estab- 
lished 1913. 

Number  of  Teachers,  14,237.     Contributory. 
Laws 

Sess.  Acts  and  Resolves  1908  ch.  498,  April  30,  and  ch. 
589.  Permissive  for  any  city  to  establish  pension  sys- 
tem; reprint.  In  Sch.  Laws  1911,  p.  78;  N.  Ed.  Assn. 
p.  305;  Bur.  Ed.  Bull.  p.  155. 

1913,  ch.  832,  June  19  (Establ.  state-wide  system). 

1914,  ch.  494. 

1915,  ch.  198.     Reducing  service  requirements  for  re- 
fund benefits.) 

1916,  ch.  54,  60,  238,  257,  152.     (Resolves). 

1917,  ch.  233,  introducing  a  disability  provision. 
Also  see  under  Boston,  Mass. 

Reports  and  statistics 

Teachers'  Retirement  Board : 

First,  second  and  third  annual  reports,  Dec.  31,  1914, 
1915,  1916.  Review  of  the  provisions  and  condition 
of  the  fund. 

Bulletin  No.  i,  1913  and  No.  2,  1915,  30  p. 
Description  and  text  of  the  law  1913. 
Descriptions 

Angier,  E.  M.  New  plan  of  teachers'  annuities;  savings 
bank  insurance  in  Massachusetts.  In  Education  (Bos- 
ton) Dec.  1909,  p.  229-233. 

Bur.  of  Ed.  Bui.  p.  155-158.     (Describ.  law  1908.) 

320 


APPENDICES 

Carn.  Found.  1913,  p.  46.     (Describes  law  1913.) 
1914,  p.  28  and  29. 

Discusses  the  good  features  of  the  act  1913. 
Comm.  Ed.  1907,  v.  i,  p.  449. 

Describ.  insufficiency  of  income  of  the  Teachers' 
Annuity  Guild;  extracted  from  7oth  report  of  the 
Mass.  Bd.  of  Ed.  p.  323-325. 

1908,  v.  i,  p.  104.     (Describ.  law  1908.)  ) 

1913,  v.  i,  p.  914.     (Describ.  law  1913.) 
Bd.  Ed.  7oth  report  p.  323-325. 

Describes  unsatisfactory  condition  of  the  Mass.  Annuity 
Guild;  its  appeal  for  support. 
Bd.  Ed.  p.  11-30.     (Proposed  pension  bill.) 
Russel,  Eugene  D.    The  teachers'  annuity  guild.    In  Jo. 
of  Ed.  (Mass.)  Dec.  17,  1908,  p.  659-663. 
Description  of  the  annuity  guild,  which  is  a  private 
fund. 
Analysed  in  comparative  charts:  III,  IV,  VII  (1908)  ;  VI, 

VIII,  IX  (1913). 

For  a  history  and  criticism  of  this  fund,  see  p.  234. 
BOSTON  TEACHERS'  RETIREMENT  FUND.    Established  1900. 
Number  of  Teachers,  3,054.     Contributory. 
Laws 

Sess.  Acts  and  Resolves  1900,  ch.  237,  Apr.  17. 
Establ.  Teach.  Retire.  Fd. 
1902  ch.  233  (Amend.  Teach.  Retirem.  Fd.) 
1908  ch.  589,  June  3. 

Establ.  Permanent  Fund;  reprint,  in  Bur.  Ed.  Bull., 
p.  156-8. 
1910  ch.  617. 

(Amending  Permanent  Fund,  increasing  the  pension 
and  extending  it  to  sixty  annuitants  of  the  Retirement 
Fund. ) 
1912  ch.  569. 

Boston  Teachers'   Retirement  Fund  Association.     Con- 
stitution and  By-Laws  1912. 
Reports  and  statistics 

Committee  on  Finance.  Report  to  the  Bd.  of  Trustees 
of  the  Boston  P.  S.  Teachers'  Retirement  Fund,  1902, 
6  p. 

Recommending  the  amount  of  annuity  in  1903  to  be 
$168. 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Comm.  Ed.  1907,  v.  i,  p.  448-49. 

Report  of  the  retirem.  fund,  reprinted  from  Mass.  Bd. 

Ed.  7oth  report,  p.  320-23. 
Montgomery,  VV.  J.,  State  Actuary.     Report  to  the  Bd. 

of  Trustees  of  the  Boston  Teachers  Retirement  Fund, 

Sept.  16,  1914,  14  p. 

Analyzes  the  unsatisfactory  condition  of  the  fund,  de- 
fines the  amount  of  annuity  it  can  sustain  and  proposes 

certain  recommendations  to  strengthen  the  fund. 
Secretary  of  the  Teachers'  Retirement  Fund,  Annual  Re- 
ports, 1900-1914.     (4-page  leaflets.) 
Permanent  Pension  Fund,  Annual  report  for  the  year 

1916.    In  the  Minutes  of  the  Boston  School  Committee, 

Feb.  21,  1916,  page  19. 
Descriptions 

Carn.  Found.  1912,  p.  41.     (Description  of  the  Retirem. 

Fund. ) 
Comm.  Ed.  1894-95,. v.  I,  p.  1079-81. 

Description   of   the   establishment   of   the   Mut.   Ben. 

Assn. ;  extract  from  Supt's  report. 

1903-4,  v.  2,  p.  2282.      (Describes  act  1900.) 
Mass.  Bd.  Ed.  7oth  report,  p.  320-23. 

Describes  Retir.  Fund  and  Mutual  Benefit  Association; 

receipts  and  disbursements. 

N.  Ed.  Assn.  1905,  p.  183.     (Describes  retir.  fund.) 
Mass.  Com.  Old  Age  Pens.,  p.  278. 

Description  of  the  Retirement  and  Permanent  Fund. 
Mass.  Com.  Pens.,  p.  31-63. 

Actuarial  rept.  showing  a  deficiency  in  the  Retirement 

Fund  of  $1,312,687. 

p.  149-153  (history  and  legislation). 

p.  205-207  (proposed  ligislation). 

Boston  School  Committee.     Circular  of  information, 

I9I5»  P-  38-     Brief  description  of  provisions  of  the 

Permanent  Fund. 
Analyzed  in  comparative  charts  III..     (Benev.  Assn.  1889; 

funds  1900-08)  ;  IV,  VII,  VIII,  IX  (1900-12). 
For  a  history  and  criticism  of  this  fund,  see  p.  209. 
BOSTON  TEACHERS'  PERMANENT  FUND.    Established  1908. 
See  Laws  under  Boston  Teachers'  Retirement  Fund  above 
For  a  history  and  criticism  of  this  fund,  see  p.  212. 

322 


APPENDICES 

BROOKLINE 

Number  of  Teachers,  196.     Non-contributory. 
Laws:  See  under  Mass.  Act.  1908. 

MICHIGAN 

MICHIGAN  TEACHERS'  RETIREMENT  FUND.   Established  1915. 
Number  of  Teachers,  18,583.     Entirely  contributory. 
Laws 

Publ.  Acts,  1915,  ch.  174,  May  n. 

Establishing  state-wide  system. 
Also  see  under  Detroit  Laws  1895  and  J9O7. 
Descriptions 

Carn.  Found.  1915,  p.  53.     (Describes  law  1915.) 
Analyzed  in  comparative  charts:  IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  200. 
DETROIT  TEACHERS'  RETIREMENT  FUND.     Established  1895. 
Number  of  Teachers,  2,396.     Contributory. 
Laws 

Loc.  Sess.  Acts  1895,  ch.  431,  May  22. 

Establ.  Retir.  Fund  in  Detroit;  printed  together  with 
by-laws  in  Comm.  Ed.  1894-95,  p.  1082. 
1907,  ch.  536,  May  14.     (Amendment  making  mem- 
bership compulsory.) 

Board  of  Trustees  of  the  P.   S.  Teachers'  Retirement 
Fund.     12-p.  booklet.     (Text  of  law  1907,  constitu- 
tion and  by-laws.) 
Reports  and  statistics 

Board  of  Trustees   ....   Regular  meeting,  May  20, 
191 5;  Sept.  20,  1915. 

Receipts,  disbursements,  list  of  annuitants. 
Descriptions 

Comm.  Ed.  1903-04,  v.  2,  p.  2283. 
N.  Ed.  Assn.  1905,  p.  182-183. 

Analyzed  in  comparative  charts:  (Act  1907)  :  III,  IV,  VII, 
VIII,  IX. 

MINNESOTA 

MINNESOTA  TEACHERS'  INSURANCE  AND  RETIREMENT  FUND. 

Established  1915. 

Number  of  Teachers,  14,759.    Contributory. 
Laws 

Gen.  Sess.  Laws  1909,  ch.  343,  Apr.  21. 

323 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Permissive   for   cities  over   50,000  pop.   to   establish 

pension  system;  repr.  in  Minn.  Sch.  L.  1911,  p.  106;  In 

N.  Ed.  Assn. 
Gen.  Sess.  Laws  1911,  ch.  383,  Apr.  20. 

Extending  L.  1909  over  cities  exceeding  10,000  pop. ; 

repr.  In  Sch.  L.  1911,  p.  106;  In  N.  Ed.  Assn.,  p.  305. 

1915,  ch,  199,  Apr.  20. 

Establ.  state-wide  system :  Teachers'  Insurance  and  Re- 
tirement Fund. 
Department  of  Education,   Minn.   Law,    1915,  ch.    199, 

6-page  booklet. 
Descriptions 

Comm.  Ed.  1909,  v.  I,  p.  118.      (Describes  law  1909.) 

1911,  v.  i,  p.  99.     (Describes  amendm.  1911.) 
Cam.  Found.  1915,  p.  51-52.     (Describes  law  1915.) 
Teachers'  Insurance  and  Retirement  Fund.     Circular  of 

information,  July,  1915,  4-page  leaflet. 

Explaining  the  law. 
Analyzed  in  comparative  charts  VII,   VIII    (1911);  IX 

(I9I5). 
For  a  history  and  criticism  of  this  fund,  see  p.  190. 

DULUTH     TEACHERS'     RETIREMENT     FUND     ASSOCIATION. 

Established  1911. 

Number  of  Teachers,  469.     Contributory. 
Laws:  See  under  Minnesota;  law  1911. 
Descriptions 

Carn.  Found.  1912,  p.  36. 
Analyzed  in  comparative  charts:  IV,  VIII,  IX. 
MINNEAPOLIS  TEACHERS'  RETIREMENT  FUND  ASSOCIATION. 

Established  1909. 

Number  of  Teachers,  1,606.     Contributory. 
Laws:  See  under  Minnesota,  Laws  1909  and  1911. 
Reports    and    statistics:    Minneapolis    Teachers'    Retirem. 
Fund  Assn.     Sixth  Annual  Report  1914-15.     16  p. 
Contains  a  statement  of  receipts  and  disbursements, 
balance  sheet  and  secretary's  report. 
Analyzed  in  comparative  charts:  III  (1909)  ;  IV,  VIII,  IX 

(1911). 
ST.   PAUL  TEACHERS'   RETIREMENT  FUND  ASSOCIATION. 

Established  1909. 
Number  of  Teachers,  959.     Contributory. 

324 


APPENDICES 

Laws:  See  under  Minnesota,  Session  laws  1909  and  1911. 
Teachers'  Retirement  Fund  Association,  articles  of  in- 
corporation and  by-laws,  18  p. 

Analyzed  in  comparative  charts:  III    (1909);   VIII,   IX 
(1911). 

MONTANA 
MONTANA  PUBLIC  SCHOOL  TEACHERS'  RETIREMENT  SALARY 

FUND.     Established  1915. 
Number  of  Teachers,  4,731.     Contributory. 
Laws 

Sess.  Laws  1915,  ch.  95,  March  8. 

Establishing  state-wide  system. 

Retirement  Salary  Fund  Board.    P.  S.  Teachers'  Retire- 
ment Salary  Fund.    8-p.  booklet.     (Text  of  the  law.) 
Descriptions. 

Carn.  Found.  1915,  p.  52.     (Describes  law  1915.) 
Analysed  in  comparative  charts:  IX. 

NEBRASKA 
Descriptions 

Carn.  Found.  1912,  p.  52.     (Describes  Recommendations 

of  the  committee,  1915;  listed  by  error  as  a  law). 
Neb.  Supt.  Ed.  23rd  Report,  p.  342-44. 

Describes  recommendations  of  the  special  committee 
as  to  the  establishment  of  a  state-wide  system. 
Analyzed  in  comparative  charts:  IX. 

Recommendations  of  Special  Committee;  listed  by  error 

as  a  law. 

OMAHA  TEACHERS'  RETIREMENT  FUND  ASSOCIATION.  Estab- 
lished 1909. 
Teachers'  Annuity  and  Aid  Association  (private  fund) 

establ.  in  1897. 

Number  of  Teachers,  947.     Contributory. 
Laws 

Sess.  Laws  1909,  ch.  132,  March  24.  • 

Permissive  for  metropol.  cities  repr.  in  N.  Ed.  Assn. 
p.  306-307. 

Teachers'  Annuity  and  Aid  Association.     Articles  of  in- 
corporation and  By-laws,  33-p.  booklet. 
Descriptions 

Carn.  Found.  1914,  p.  37. 

Comm.  Ed.  1909,  v.  i,  p.  115. 

325 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

NEVADA 
NEVADA  TEACHERS'  RETIREMENT  SALARY  FUND.  Established 


Number  of  Teachers,  657.     Contributory. 
Laws 

Sess.  Statutes  1915,  ch.  198,  March  23. 

Establ.  state-wide  system. 
Descriptions 

Carn.  Found.  1915,  p-  54.     (Describes  law  1915.) 
Analyzed  in  comparative  charts:  IX. 

NEW    HAMPSHIRE 
NEW  HAMPSHIRE  TEACHERS'  RETIREMENT  SYSTEM.    Estab- 

lished 1915. 

Number  of  Teachers,  3,083.     Non-contributory. 
Laws 

Sess.  Laws  1915,  ch.  165,  April  21. 

Establ.  state-wide  system. 

Dept.  of  Public  Instruction.     Division  of  statistics  and 
accounts. 

Rules  and  regulations  relating  to  Teachers'  Pensions. 
7-p  booklet. 

Text  of  the  law  and  regulations. 
Descriptions 

Carn.  Found.   1915,  p.  55.     (Brief  description  of  Act 

I9I5-) 
Analyzed  in  comparative  charts:  IX. 

NEW   JERSEY 

NEW  JERSEY  TEACHERS'  RETIREMENT  FUND.  Established  1896. 
NEW  JERSEY  TEACHERS'  35-YEAR  SERVICE  HALF  PAY  PEN- 

SION  SYSTEM.     Established    1903. 
Number  of  Teachers,  16,741.     Contributory. 
Laws 

Publ.  Sess.  Laws  1896,  ch.  32,  March  n. 

Establ.  Retir.  Fund;  I  per  cent  sal.  deduction. 
L.  1899  ch,  178  (amend.  Ret.  F.). 
L.   1900  ch.  96  (making  Ret.  F.  Law  a  part  of  the 
school  law). 
Spec.  Sess.  Laws  1903,  ch.  i,  art.  XXV,  Oct.  19. 

L.  1905  ch.  95   (appropriation  for  administ.  expense 
of  Ret.  F.). 

326 


APPENDICES 

Sess.  Laws,  1906,  ch,  314,  June  13.  (Increasing  salary 
deductions. ) 

Sess.  Laws,  1917,  ch.  139,  May  7. 

Sess.  Laws,  1903,  ch.  16,  March  5  (establishing  service 
pension  system  of  the  Bd.  of  Education). 

Sess.  Laws  1906,  ch.  103. 

Reducing  length  of  service  from  40  to  35  years. 
1907,  ch.  121,  May  7  and  1912,  ch.  58  amendment. 
Reprint,  in  N.  Ed.  Assn. 
1911,  ch.  276  and  1912,  ch.  58  amendment. 
1914,  ch.  268,  Supplem.  to  Gen.  School  Law. 
Pension  to  be  paid  by  the  state  and  not  by  local  authori- 
ties; new  section  added. 
Reports  and  statistics 

State  Teachers'  Retirement  Fund  Association.  Report 
of  the  Retirement  Fund  Department.  In  Annual  Re- 
ports and  Proceedings  of  the  N.  J.  Teachers'  Associa- 
tion, 1910,  p.  160-75. 

Report   ....   Sept.  25,  1915,  15  p. 

Contains  a  statement  of  receipts  and  disbursements; 
comparison  between  N.  J.  and  the  N.  Y.  and  Mass, 
funds;  defense  of  its  soundness;  note  reactuarial  study; 
answer  to  criticism. 

New  Jersey  Woman  Teachers7  Alliance.  Compendium 
of  Facts.  1918.  Contains  the  report  of  D.  P.  Fackler, 
actuary,  on  the  condition  of  the  Teachers'  Retirement 
Fund;  introduction  by  Miss  E.  A.  Allen;  synoptical 
tables. 

Bureau  of  State  Research  of  the  New  Jersey  State 
Chamber  of  Commerce.  Teachers'  Reirement  Sys- 
tems in  New  Jersey,  Their  Fallacies  and  Evolution. 
Prepared  by  Paul  Studensky,  1918.  88  p.  Analysis 
of  the  history  of  the  systems,  their  present  condition 
and  practical  remedies. 

Pension  and  Retirement  Fund  Commission  of  the  State 
of  New  Jersey.  Preliminary  report.  January,  1918. 
State  Research  Consecutive  number  9.  20  p.  Con- 
tains in  chapter  iv  a  discussion  of  teachers'  systems. 

Pension  and  Retirement  Fund  Commission  of  the  State  of 
New  Jersey.  Reorganization  of  New  Jersey  Teachers' 
Pension  and  Retirement  Systems,  January,  1919.  State 

327 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Research  Consecutive  number  13,  28  p.     Contains  criti- 
cal and  constructive  conclusions,  outline  of  proposed 
legislation  and  actuarial  estimates. 
Descriptions 

Allen,  Elizabeth  A.  The  story  of  a  woman's  campaign. 
In  Review  of  Reviews  (N.Y.)  1897,  v.  15,  p.  701-11. 
Writer  describes  the  campaign  which  resulted  in  the 
establishment  of  the  N.  J.  Teachers'  Retirement  Fund ; 
surveys  the  existing  pension  funds  in  the  U.  S. ;  pre- 
sents a  comparative  table  of  annuity  and  aid  associa- 
tions and  retirement  funds  in  the  U.  S. 

Board  of  Trustees  of  the  Teachers'  Retirement  Fund. 
1907,  23  p. 

Contents:  Preface,  text  of  the  law  1907,  explanation 
synopsis  and  appeal  to  join. 

Carn.  Found.  1912,  p.  27-30.     (History  of  the  fund.) 

—     1915,  P-  62.     (Warning  the  fund  against 
the  approaching  disaster.) 

Comm.  Ed.  1894-95,  v.  I,  p.  1108-1113. 

Description  of  a  plan  for  a  Newark  Teachers'  Retire- 
ment Fund;  criticism  and  discussion. 
1903-4,  v.  2,  p.  2283-84.     (Extracts  from  the  law  and 
report  of  the  fund.) 
1907,  v.  i,  p.  452.     (Report  of  the  fund.) 

1911,  v.  i,  p.  99.      (Description  of  amendm.  1911.) 

1912,  v.  i,  p.  67. 

Description  of  amendm.  1912 ;  comment  on  coexistence 
of  two  systems. 

Crater,  Georgia  Beers.  Teachers'  Pensions.  In  N.  J. 
State  Teachers'  Association.  Annual  Report  and  Pro- 
ceedings 1900,  p.  147-58. 

State  Teachers'  Association.     Tenure  Retirement  Fund 
and  Pensions  in  peril.     9-p.  pamphlet. 
Contains  an  appeal  to  defeat  the  bill  No.  375  merging 
the  retir.  fund  with  the  state  half-pay  pension. 
Analyzed  in  comparative  charts  III-IX. 

In  VII  and  VIII,  the  two  systems  are  confused. 
For  a  history  and  criticism  of  the  two  systems,  see  pp.  169 
and  I83.1 

1See  also   Chapter  XVIII  and  Appendix  3    (e)    regarding  three  new 
laws   (Ch.  80,  81  and  82)   enacted  in  April,  1919. 

328 


APPENDICES 

NEW   YORK 

NEW  YORK  STATE  TEACHERS'  RETIREMENT  FUND.     Estab- 
lished 1911. 

Number  of  Teachers,  24,102.     Contributory. 
Laws 

Sess.  Laws,  1895,  cn-  767,  May  27. 

Permissive  for  any  town  to  establ.  pension  funds;  re- 
print in  N.  Ed.  Assn.  p.  308-12. 

1911,  ch.  449,  June  26.     (Establ.  state-wide  system.) 

1913,  ch.  511,  Sec.  1 100-1108.    (Superintendent  to  par- 
ticipate. ) 

1914,  ch.  44,  Mar.  17. 

Providing  for  a  state-contribution  of  i  per  cent  of  sal. 
Also  see  under:  Albany,  Buffalo,  Cohoes,  Elmira,  Mt. 
Vernon,  N.  Y.  City,  Nassau,  Rochester,  Saratoga, 
Schenectady,  Syracuse,  Troy,  Yonkers,  Watervliet, 
Westchester. 

Also  see  N.  Y.  L.  1910  ch.  441,  June  8. 
Retirem.  Fund  for  teachers  in  state  institutions. 
State  Teachers'  Retirement  Fund  Board,  Documents  1-3. 
Doc.  No.  2  contains  the  text  of  the  law  as  amended 
in  1914;  No.  3  contains  portions  of  the  law,  by-laws, 
explanatory  notes  as  to  retirement,  age,  etc. ;  instruc- 
tions to  teachers. 
Descriptions 

Cam.  Found.  1912,  p.  30-33.     (Describes  law  1911.) 
Comm.  Ed.  1911,  v.  i,  p.  96.     (Describes  law  1911.) 

1912,  v.  i,  p.  67.     (Describes  am.  1912.) 
Analyzed  in  comparative  charts:  III-VIII  (1911)  ;  IX  (also 

1913-14). 
For  a  history  and  criticism  of  this  fund,  see  p.  179. 

ALBANY  TEACHERS'  RETIREMENT  FUND.     Established  1908. 
Number  of  Teachers,  440.     Contributory. 
Laws 

Sess.  Laws  1907,  ch.  414,  June  4.     (Establ.  Retir.  Fund.) 
1910,  ch.  451,  June  9.     (Increasing  excise  money  con- 
tribution from  3  per  cent  to  5  per  cent.) 
Reports  and  statistics 

Comptroller's  report  of  the  teachers'  retirement  fund  for 
the  years  1913-1915.  (Two-page  mimeographed  leaf- 
lets.) B.  M.  R.  Collection. 

329 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Analysed  in  comparative  charts:  III,  IV,  VII. 
BUFFALO  TEACHERS'  RETIREMENT  FUND.    Established  1896. 
Number  of  Teachers,  2,136.     Contributory. 
Laws 

Sess.  Laws  1891,  ch.  105. 

(Permissive  for  Buffalo  to  establish  Retir.  Fd.) 
1896,  ch.  928   (establishing  Retir.  Fund  in  Buffalo; 
entirely  contributory). 
1909,  ch.  554,  May  28. 

Increasing  salary  deductions  and  making  city  to  con- 
tribute an  equal  amount. 

1914,  ch.  217,  Apr.  7,  sec.  294-304,  city  charter.    No 
material  changes. 

Analyzed  in  comparative  charts  III,  IV,  VII-IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  216. 
COHOES  TEACHERS'  RETIREMENT  FUND.    Established,  1908. 
Number  of  Teachers,  69.     Contributory. 
Laws 

Sess.  Laws  1908,  ch.  332,  May  19. 

Establishing  Retir.  Fund  in  Cohoes. 
Analyzed  in  comparative  charts:  IX. 
ELMIRA  TEACHERS'  PENSION  FUND.    Established  1907;  now 

merged  with  the  State  Teachers'  Retirement  Fund. 
Laws 

Sess.  Laws  1907,  ch.  86,  March  27. 

Establ.    Pens.   Fund;   reprint,   in   Bur.   Ed.   Bull.,   p. 
159-160. 

Analyzed  in  comparative  charts:  III,  IV. 
GREEN  COUNTY  TEACHERS'  RETIREMENT  FUND.    Established 

1910;  abolished  in  1911. 
Laws 

Sess.  Laws  1910,  ch.  444.     (Establishing  retir.  fund  in 
Green  County.) 
1911,  ch.  146. 

Abolishing  retir.  fund  teachers  contribute  to  the  state 
fund. 
MT.  VERNON  TEACHERS'  RETIREMENT  FUND.     Established 

1909. 

Number  of  Teachers,  246.     Contributory. 
Laws 

Sess.  Laws  1909,  ch.  92,  Mar.  17. 

330 


APPENDICES 

Establ.  retir.  fund  in  Mt.  Vernon. 
1913,  ch.  44,  Feb.  27  (Compulsory  membership). 
Analyzed  in  comparative  charts:  IX. 

NASSAU   COUNTY  TEACHERS'   RETIREMENT   FUND.     Estab- 
lished 1910;  now  merged  with  the  State  Teachers'  Retire- 
ment Fund. 
Laws 

Sess.  Laws  1910,  ch.  407,  June  7. 
Establ.  retir.  fund  in  Nassau  County. 
1911,  ch.  692.     (Amending  law  1910.) 
NEW  YORK  CITY  TEACHERS'  RETIREMENT  FUND.     Estab- 
lished 1894. 

Number  of  Teachers,  23,905.     Contributory. 
Laws 

Sess.  Laws  1894,  ch.  296. 

Establ.  N.  Y.  fund;  repr.  in  Comm.  Ed.   1894-5,  p. 

1095. 

1895,  ch.  656.      (Establishing  Brooklyn  fund.) 

1898,  ch.  91.     (Providing  the  fund  with  a  portion  of 

excise  taxes.) 

1901,  ch.  1 86  and  466.     (Merging  the  two  funds.) 

1902,  ch,  530. 

1903,  ch.  177. 

1905,  ch.  661.      (Introducing  the  I  per  cent.  sal.  deduc- 
tion. ) 

1907,  ch.  167.     (Reprint,  in  Bur.  Ed.  Bull.  p.  160-3.) 
1917.   (Reorganizing  the  old  fund  on  a  scientific  basis.) 

By-Laws  of  Bd.  of  Ed.  1911,  Jan.  18. 
Descriptions 

Carn.  Found.  1912,  p.  39-41.     (Description  of  the  his- 
tory and  condition  of  the  fund.) 
I9I3>  P-  53~55-     (Alarming  condition  of  the  fund.) 
1914,  p.  39.     (Collapse  of  the  fund.) 
I9I5>  P-  59-6o.      (Investigation  of  the  N.  Y.  Pension 
Commission. ) 

Comm.  Ed.  1894-95,  v.  I,  p.  1095. 

Text  of  the  law  1894;  constitution  of  Mut.  Ben.  Assn. 
1903-4,  v.  2,  p.  228.     (Brief  description.) 

N.  Ed.  Assn.  1905,  p.  183.     (Brief  description.) 

See  also  under  Reports. 

Pension  Points  No.  1-5  and  Circulars. 

331 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Issued  during  the  pension  campaign  of  Jan.-April 
1916;  explain  provisions  of  the  Lockwood-Ellenbogen 
bill  and  urge  to  support  it. 

Scrap-Book  on  the  N.  Y.  Teachers'  Retirement  Fund. 
Contains  newspaper  clippings  for  the  period  1912-16; 
campaign  in  favor  of  the  Lockwood-Ellenbogen  bill. 

Federation  of  Teachers'  Associations,  N.  Y.  City.     The 
A.B.C.  of  teachers'  pensions.    Memorandum  submitted 
to  the  Senate  Committee  on  Affairs  of  cities.    In  favor 
of  the  Lockwood-Ellenbogen  bill.     1916,  20  p. 
Describes  the  advantages  of  the  proposed  bill. 

Paul  Studensky.  New  York  City  Teachers'  Retirement 
Fund.  In  National  Municipal  Review,  July,  1916, 

p.  520-22. 

Review  of  the  report  of  the  Commission  on  Pensions. 
Unsoundness  of   using   miscellaneous   revenues.      In- 
adequacy of  contributions.    Purposes  of  pension  funds. 
Harmful  benefits.    Plan  of  reorganization. 
Reports  and  statistics 

Commission  on  Pensions.  Report  on  the  Teacher's' 
Retirement  Fund,  City  of  N.  Y. 

Prepared  by  Robert  von  Reutlinger,  letter  of  transmittal 
by  Henry  Bruere,  vice-chairman  and  secretary  of  the 
commission.  Present  pens,  system.  Its  cost.  A  tenta- 
tive reorganization  plan.  History  of  the  fund  and  its 
administration.  Actuarial  report.  Statistical  tables. 

Commission  on  Pensions.  Report  on  the  Pension  Funds 
of  the  City  of  New  York,  Part  I.  Operation  of  nine 
pension  funds,  1916,  171  p. 

Prepared  by  Robert  von  Reutlinger,  letter  of  transmittal 
by  Henry  Bruere,  vice-chairman  and  secretary  of  the 
commission.  A  critical  analysis;  includes  among  the 
nine  funds  the  teachers'  fund. 

Part  II.  An  actuarial  investigation  of  the  mortality  and 
service  experience  of  the  Special  and  General  Service 
Funds  for  Municipal  employees,  1916,  422  p. 
Prepared  by  George  B.  Buck,  actuary.  Letter  of  trans- 
mittal by  Henry  Bruere,  vice-chairman  and  secretary 
of  the  commission.  Contains  an  introduction  describ- 
ing forces  which  determine  cost ;  methods  of  computing 
rates.  Includes  tables  and  diagrams  on  family  history 
and  a  valuation  of  assets  and  liabilities. 

332 


APPENDICES 

Secretary  of  the  Board  of  Retirement  of  the  Teachers' 
Retirement  Fund.    Annual  reports  1908  to  date. 

1911  (contains  a  description  of  the  efforts  to  amend  the 
law). 

1912  (contains  a  description  of  the  condition  of  the 
fund;  British  and  N.  Zealand  pens,  systems). 

1913  (contains  the  report  of  actuary  Hutchinson,  re- 
printed by  the  Globe  in  separate  pamphlet.     Actuary 
describes  past  and  present  systems;  income  and  dis- 
bursements;   teachers'    service    experience;    mortality 
rates;  valuation  of  liabilities;  unsatisfactory  conditions 
of   the    fund;   constructive    recommendations   of    the 
actuary. ) 

Analyzed  in  comparative  charts:  III,  IV,  VII-IX;  also  In 

N.  Y.  Com.  Pens.  Teach.  Ret.  p.  90-91. 
Showing  the  changes  in  legislation  from  1891  to  1911. 
For  history  and  criticism  of  this  fund,  see  p.  243. 
ROCHESTER    TEACHERS'    RETIREMENT    FUND.      Established 

1906. 

Number  of  Teachers,  1,178.     Contributory. 
Laws 

Sess.  Laws  1905,  ch.  608,  May  25.     (Establ.  Retirem. 
Fund  in  Rochester.)     1907,  ch.  755,  sec.  405. 
Section  of  city  charter  amending  law   1905. 
Analysed  in  comparative  charts:  III,  IV  VII-IX. 
SARATOGA  COUNTY  TEACHERS'  RETIREMENT  FUND.     Estab- 
lished 1910,  now  merged  with  the  State  Teachers  Retire- 
ment Fund. 
Laws 

Sess.  Laws  1910,  ch.  191,  Apr.  29. 

Establ.  Retirem.  Fund  in  Saratoga  County. 

SCHENECTADY   TEACHERS'    RETIREMENT    FUND.       Established 

1907,  now  merged  with  the  State  Teachers'  Retirement 
Fund. 
Laws 

Sess.  Laws  1907,  ch.  306,  May  6  (Establ.  Ret.  Fd.  in 
Schenectady)    1908,  ch.    116,  Apr.    13    (Making  city 
contribution  equal  teachers'  contribution). 
Analysed  in  comparative  charts:  III,  IV. 
SYRACUSE  TEACHERS'  RETIREMENT  FUND.    Established  1897. 
Number  of  Teachers,  667.     Contributory. 

333 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Laws 

Sess.  laws  1897,  ch.  750,  May  22. 

Establ.  Retires.  Fund  in  Syracuse;  entirely  contribu- 
tory; reprint  in  a  separate  booklet. 
Analyzed  in  comparative  charts:  III,  IV,  IX. 
TROY  TEACHERS'  PENSION  FUND.    Established  1906. 
Number  of  Teachers,  327.     Contributory. 
Laws 

Sess.  Laws  1906,  ch.  305,  April  24.     (Establ.  Pens.  Fund 

in  Troy.) 

Analysed  in  comparative  charts:  III,  IV,  IX. 
WATERVLIET   TEACHERS'   RETIREMENT   FUND.     Established 
1908,  now  merged  with  the  state  Teachers'  Retirement 
Fund. 
Laws 

Sess.  Laws  1908,  ch.  140,  April  16. 

Establishing  Retir.  Fund  in  Watervliet. 
WESTCHESTER     COUNTY    TEACHERS'     RETIREMENT    FUND. 

Established  1909. 
Laws 

Sess  .Laws  1909,  ch.  431,  May  22. 

Establishing  Retirement  Fund  in  Westchester  County. 
1911,  ch.  23,  March  16  am. 
City's  contribution  to  equal  i  per  cent  of  sal. 
YONKERS  TEACHERS'  RETIREMENT  FUND.    Established  1908; 
now  merged  with  the  State  Teachers'  Retirement  Fund. 
Laws 

Sess.  Laws  1908,  ch.  452,  May  21,  city  charter,  article 
IX,  sec.  18-20. 

Establ.  Retir.  Fund  in  Yonkers. 
Analyzed  in  comparative  charts:  III,  IV,  IX. 

NORTH    DAKOTA 
NORTH  DAKOTA  TEACHERS'  INSURANCE  AND  RETIREMENT 

FUND.     Established  1913. 
Number  of  Teachers,  8,093. 1     Contributory. 
Laws 

Sess.  Laws  1913,  ch.  251,  March  n. 

(Establ.  state-wide  system.) 
Descriptions  (Act  1913) 
Carn.  Found.  1914,  p.  31. 

Statistics  of  1915. 

334 


APPENDICES 

Comm.  Ed.  1913,  v.  i,  p.  915. 
Analyzed  in  comparative  charts:  VIII,  IX. 

OHIO 

Note:  Uniform  laws  (1911  at  present)  govern  all  the 
twenty  cities  which  have  availed  themselves  of  the  au- 
thority given  under  these  laws.  The  references  to  leg- 
islation and  to  analysis  of  legislation  in  comparative 
charts  are,  therefore,  given  under  the  state  and  are  not 
repeated  under  each  of  these  pension  funds :  Belle  font- 
aine  (1912)  No.  of  Teachers,  49;  Canton  (1913)  No. 
of  Teachers,  290;  Chillicothe  (1913)  No.  of  Teachers, 
80 ;  Cincinnati  (1897)  No.  of  Teachers,  1,807;  Cleve- 
land (1906)  No.  of  Teachers,  3,693;  Columbus  (1909) 
No.  of  Teachers,  996;  Dayton  ( 191 1 )  No.  of  Teachers, 
557;  Fremont  (1914)  No.  of  Teachers,  64;  Hamilton 
(1908)  No.  of  Teachers,  164;  Lakewood  (1914)  No. 
of  Teachers,  152;  Massillon  (1914)  Norwalk  (1913) 
No.  of  Teachers,  51;  Norwood  (1912)  No.  of 
Teachers,  114;  Piqua  (1913)  No.  of  Teachers,  72; 
Sandusky  (1910)  No.  of  Teachers,  104;  Springfield 
(1907)  No.  of  Teachers,  238;  Tiffen  (1911)  No.  of 
Teachers,  51;  Toledo  (1910)  No.  of  Teachers,  983; 
Youngstown  (1905)  No.  of  Teachers,  536;  Zanesville 
(1914)  No.  of  Teachers,  121.  All  these  systems  are 
contributory.1 
Laws 

Sess.  Laws  1896,  Apr.  14,  p.  152-55,  sec.  3897  of  Rev. 
St.     Permissive  for  cities  of  ist  grade  ist  class. 
1900,  Apr.  1 6,  p.  305.      (Increasing  sal.  deductions  to 
$2  monthly.) 

1902,  May  12,  p.  609-14.    (Permissive  for  all  school  dis- 
tricts. ) 

1904,  Apr.  25,  p.  340.      (Providing  for  city  contribu- 
tion up  to  2  per  cent  of  school  taxes.) 
1911,  June  13,  p.  445-56.    (Making  membership  com- 
pulsory; reprint,  in  Sch.  L.   1912,  p.   167,  sec.  7875- 
7896  of  Gen.  Code;  N.  Ed.  Assn.,  p.  313-315.) 
Descriptions 

Bur.  Ed.  Bui.  p.  163-64. 

]See  Chapter  XVIII  and  Appendix  3    (f)    regarding  a  new  state-wide 
pension  law  enacted  in  April,  1919. 

335 


Court  decisions  as  to  compulsory  membership,  etc. 
Comm.  Ed.  1903-4,  v.  2,  p.  2284-85  (describes  law  1902). 

1911,  v.  i,  p.  97  (describes  law  1911). 
Jones,  E.  A.     A  state-wide  pension  system.     In  Ohio 

Educational  Monthly,  July,  1910,  p.  317-24. 
Analysed  in  comparative  charts:  III,  IV,  VII-IX. 
CANTON — (See  note  under  Ohio) 
Reports  and  pamphlets 

Report  of  Teachers'  Pension  Fund,  1913-15.  Two  mime- 
ographed pages. 

Receipts  and  disbursements,  annuity  list. 
CINCINNATI — (See  note  under  Ohio) 
Reports  and  statistics 

Board  of  Trustees  of  the  Cincinnati  Teachers'  Pens. 
Fund.  Annual  report.  In  Com.  Ed.  (U.  S.)  1907, 
v.  i,  p.  452. 

Receipts  and  disbursements,  etc. 

Board  of  Trustees  of  the  School  Teachers'  Pension  Fund. 
Eighteenth  Annual  Report,  Aug.  31,  1915.  8-page 
pamphlet. 

Receipts,    disbursements,    pension   list,    amounts   con- 
tributed by  pensioners  and  amounts  drawn  by  them. 
Descriptions 

Comm.  Ed.  1898-99,  v.  2,  p.  1481. 

Describes  new  law  increasing  contributions  to  save  the 
fund  from  depletion. 
CLEVELAND  TEACHERS'  PENSION  FUND.     Established  1907. 

( See  note  under  Ohio. ) 
Laws 

School  Teachers'    Pension   Law   as   amended   May   31, 
1911.     Rules  and  Regulations,  Cleveland,  1914.     16- 
page  pamphlet. 
Reports  and  statistics 

Annual  Reports  of  the  Treasurer  of  the  Teachers'  Pen- 
sion Fund,  1912,  1913,  1914  and  1915.  (4-page  leaf- 
lets.) 

For  a  history  and  criticism  of  this  fund,  see  p.  207. 
DAYTON — (See  note  under  Ohio) 
Reports  and  pamphlets 

Annual  Report  of  the  Secretary  of  the  Board  of  Trustees 
of  the  Fund.    4-page  leaflet,  receipts  and  disbursements 
for  the  years  1913  and  1914. 
336 


APPENDICES 

NORWOOD — (See  note  under  Ohio) 
Reports  and  statistics 

School  Teachers'  Pension  Fund.  In  Report  of  the  Publ. 
School  of  Norwood,  1914.  p.  56-57  (Reports  of  re- 
ceipts and  disbursements  for  the  years  1913-1914). 

SPRINGFIELD — (See  note  under  Ohio) 
Reports  and  statistics 

Pension   Trustees.      Reports    1909-1915.      2-p.    leaflets. 

Receipts  and  disbursements,  list  of  contributors. 
TOLEDO — (See  note  under  Ohio) 
Laws 

School  Teachers'  Pension  Law.  Rules  and  regulations  as 

amended  in  1910,  16  p. 
Reports  and  statistics 

Board  of  Trustees  of  the  School  Teachers'  Pension  Fund. 
Statement,  October  i,  1914,  3  p. 

OREGON 
Laws 

Gen.  Sess.  Laws  1911,  ch.  280. 

Permissive  for  districts  having  more  than  10,000  chil- 
dren of  school  age  to  establ.  retir.  funds;  reprint,  in 
School  Laws  1911,  p.  114. 
1913,  ch.  58. 

Increasing  contribution  of  the  District  Bd.  of  Ed.  from 
i  per  cent  to  3  per  cent  of  school  taxes. 
See  under  Portland,  Oregon. 
PORTLAND    TEACHERS'    RETIREMENT    FUND    ASSOCIATION. 

Established  1912. 

Number  of  Teachers,  525.     Contributory. 
La^vs:  See  under  Oregon. 

Articles  of  Incorporation  and  By-Laws.     Teachers'  Re- 
tirement Fund  Association,  District  No.  i,  Multnomah 
County,  March  12,  1914,  21  p. 
Reports  and  statistics 

Statement  of  Retir.   Fund.   Assn.    1912-1916.     2  type- 
written pages.    Receipts  and  disbursements. 
Descriptions 

Comm.  Ed.  v.  i,  p.  99.     (Describes  law  1911.) 
Analysed  in  comparative  charts:  VII    (1911);  VIII  and 
IX  (1913). 

337 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

PENNSYLVANIA 

PENNSYLVANIA     PUBLIC     SCHOOL     TEACHERS'     AND     EM- 
PLOYEES'* RETIREMENT  SYSTEM.     Established  1917. 
Number  of  Teachers,  31,740.     Contributory. 
Laws 

Sess.  Laws  1905,  ch.  186,  sec.  6,  April  22. 

Permissive  for  ist  class  districts;  reprint,  in  N.  Ed. 
Assn.  p.  314. 
1907,  ch.  169,  May  23. 

Permissive  for  2d  class  and  3d  class  districts. 
1911,  ch.  191,  Art.  XXIV,  May  18. 
Permissive  for  any  district  reprint,  in  Sch.  L.  1911. 
Art.  XXIV,  p.  114;  in  N.  Ed.  Assn.  p.  317. 
1917    (setablishing  a  state-wide   system). 
Descriptions 

Carn.  Found.  1915,  p.  47-48.     (Describes  and  criticises 

bill  1915.) 
Comm.  Ed.  1907,  v.  I,  p.  451-456. 

Describes  law  1909  and  pens,  bill  of  teachers'  assn. 
Herrick,  Cheesman  A.    Teachers'  Retirement  Fund.    In 

Penn.  School  Jo.  1911,  p.  305-8. 
Jones,  Adison  L.    Need  of  retirement  fund  for  teachers. 

In  Penn.  School  Jo.  May  1908,  p.  529-532. 
Analyzed  in  comparative  charts:  (1911)  VII,  VIII. 
For  a  history  and  criticism  of  this  fund,  see  p.  265. 

ALTOONA  TEACHERS'  RETIREMENT  FUND.    Established  1913. 
Number  of  Teachers,  260.     Contributory. 
Laws:  See  under  Pennsylvania,  Law  1911. 
CHESTER  TEACHERS'  RETIREMENT  FUND.     Established  1913. 
Number  of  Teachers,  189.     Contributory. 
Laws  and  reports 

Manual  of  Public  Schools  of  Chester,  Pa.   1915-16,  p. 
129-132,  13,  15.     Text  of  law  and  by-laws;  financial 
report. 
ERIE  TEACHERS'  RETIREMENT  SYSTEM,  under  approval  of  the 

Bd.  in  1916. 

Number  of  Teachers,  365.     Contributory. 
Laws 

Rules  of  the  Teachers'  Retirement  System  of  Erie,  June 
1916.    Galley  proof. 

Employees  included  teachers  and  other  employees. 

338 


APPENDICES 

HARRISBURG   TEACHERS'    RETIREMENT   FUND.      Established 

1908. 

Number  of  Teachers,  335.     Contributory. 
Laws 

Retirem.  Fund  Plan  and  By-Laws.     1908,  10  p. 
Descriptions 

Comm.  Ed.  1909,  v.  i,  p.  119.     (Brief  description). 
Analyzed  in  comparative  charts:  III,  IV,  IX. 

LANCASTER    TEACHERS'    RETIREMENT    FUND    ASSOCIATION. 

Established  1914. 

Number  of  Teachers,  171.     Contributory. 
Laws 

By-Laws  and  Retirement  Fund  Plan.     1912,  n-p.  book- 
let.    Contains  also  amendments. 

PHILADELPHIA  TEACHERS'  RETIREMENT  FUND.    Established 

1907. 

Number  of  Teachers,  5,895.     Contributory. 
Laws 

Retirement  Plan  and  By-Laws,     ist  District  of  Pennsyl- 
vania.    1907,  16  p. 
Laws  and  By-Laws.     In  Retirement  Board,  9th  annual 

report,   1915. 
Reports  and  statistics 

Retirement  Board.     Annual  report  for  the  years   1915 
and  1916,  30  p.    Contains  a  description  of  the  benefits, 
development  and  condition  of  the  fund;  statistical  and 
graphic  charts  showing  the  increase  of  expenditures. 
— Actuary's  report  on  the  condition  of  the  fund  June, 
1918.     51   p.    (estimate  of  assets  and  liabilities,  and 
rates  of  contributions  required  on  a  solvent  basis). 
— Series  of  Questions  and  Answers.     November,  1918. 
28  p.  (a  discussion  of  changes  necessary  to  insure  the 
solvency  of  the  systems). 
Descriptions 

Comm.  Ed.  1894-95,  v.  i,  p.  1086-92. 

Report  of  the  T.  Annuity  Aid  Assn.   (private  fund) 
est.  in  1890;  its  constitution  and  amendments. 
Analyzed  in  comparative  charts  III,  IV,  VIII,  IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  203. 

339 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

PITTSBURGH  TEACHERS'  RETIREMENT  ASSOCIATION. 1    Estab- 
lished 1912. 

Number  of  Teachers,  2,405.     Non-contributory. 
Descriptions 

Board  of  Educ.  of  Pittsburgh,     ist  annual  report  1912, 
p.  142-44.     Briefly  describes  pens,  system;  justifies  it 
on  the  ground  of  underpaid  work. 
Analyzed  in  comparative  charts  III,  IV,  IX. 
For  a  history  and  criticism  of  this  association,  see  p.  166. 
READING  TEACHERS'  RETIREMENT  FUND.     Established  1913. 
Number  of  Teachers,  389.     Contributory  . 
Laws 

Rules  and  Regulations  of  the  Teachers'  Retirement  Fund. 

School  District  of  Reading,  4  p. 
Reports  and  statistics 

Teachers'  Retirement  Board  of  Reading,     ist  and  2nd 
annual  reports  1914-1915.     Two   lo-page  pamphlets. 
Receipts  and  disbursements;  annuity  list;  the  report 
claims  that  "the  fund  is  in  sound  condition." 
SCRANTON  TEACHERS'  RETIREMENT  FUND.    Established  1911. 
Number  of  Teachers,  664.     Contributory. 
Laws 

Retirement  Plan  and  By-Laws.     Scranton,   Pa.      1912, 

8  p. 

Analyzed  in  comparative  charts:  IX. 
WILKES-BARRE  TEACHERS'  RETIREMENT  FUND.    Established 

1910. 

Number  of  Teachers,  314.     Contributory. 
Laws 

Retirement  Law  and  By-Laws.  In  Report  of  the  Public 
Schools  of  the  Wilkes-Barre  City  School  District, 
1915,  p.  48-52. 

RHODE    ISLAND 

RHODE  ISLAND  TEACHERS'  PENSION   SYSTEM.     Established 
1907. 

1  A  bill  for  a  contributory  pension  system  for  the  teachers  of  Pittsburgh 
is  now  under  consideration  of  the  legislature.  The  basis  of  the  proposed 
system  is  as  follows :  Contributions  by  teachers  I  per  cent,  to  3  per  cent, 
sal.  total  contributions  max.  $1,500.  City  contributions  min.  1^4  of  the 
teachers'  contributions  or  as  much  as  is  necessary  to  pay  pensions.  Pen- 
sions after  30  years'  service  on  superintendent's  recommendation,  after 
40  years  automatically  (min.  15  years  in  city),  or  after  20  years  on  dis- 
ability. Amount  $600  after  40  years,  $500  after  30  years,  proportionately 
less  below  30  years.  Refund  all  own  contributions  at  dismissal ;  no  refund 
at  resignation  or  upon  death  (see  Carnegie  Report,  1915). 

340 


APPENDICES 

Number  of  Teachers,  2,773.     Non-contributory. 
Laws 

Acts  and  Res.  1907,  ch.  1468,  Apr.  23. 

Establ.  state-wide  system ;  reprint,  in  Com.  Ed.     1907, 

p.  450;  in  Bur.  Ed.  Bull.,  p.  164. 

1909,  ch.  401,  Apr.  29,  amendm. 

Age   requirement   repealed,   reprint,   in   School   Laws 

1910.  p.  27  and  94;  in  N.  Ed.  Assn.  p.  317. 

1914,  ch.  1090,  May  6  (adding  disability  provision). 

1915,  ch.  1214,  Apr.  22.     (No  material  changes.) 
Reports  and  statistics 

Statement  of  Teachers'  Pensions  for  Quarter,  ended  Dec. 
31,  1915.     i  page  typewritten  leaflet. 
Number  of  pensions,  average  pension,  total  expendi- 
ture, etc. 
Descriptions 

Comm.   Ed.    1909,  v.    i,  p.    119.     (Describes  amendm. 

1909.) 
Cam.  Found.  1912,  p.  27. 

Describes  act  1907;  disbursements. 
Analyzed  in  comparative  charts:  III-VI,  VII   (1910);  IX 

(1914). 

BRISTOL  TEACHERS'  RETIREMENT  FUND.    Established  1914. 
Number  of  Teachers,  52.1     Contributory. 
Laws 

Gen.  Assembly  Acts  1914,  April  13. 

Establ.  Retirement  Fund  in  Bristol,  reprinted  by  the 
Bd.  of  Ed.  of  Bristol,  3  mimeogr.  pages. 
NEWPORT  TEACHERS'  RETIREMENT  FUND.    Established  1898. 
Number  of  Teachers,  I55-1     Contributory. 
Laws 

1898,  May  6.     In  the  R.  I.  Supt.  of  Schools,  Report  1912 

(?)  p.  85-86  (incorporating  the  fund). 
Reports  and  statistics 

Teachers'  Retirement  Fund.     In  R.  I.  Supt.  of  Schools 
Report  1912  (?)  p.  81-85. 

Report  on  the  receipts  and  disbursements;  benefits  re- 
duced from  ^2  to  y$  sal. 

PROVIDENCE  TEACHERS'  RETIREMENT  FuND.1      Established 
1897. 

4The  teachers  of  Bristol,  Newport  and  Providence  are  also  covered  by 
provisions  of  the  Rhode  Island  systems. 

341 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Number  of  Teachers,  1,082.     Contributory. 

Laws 

Pub.  Sess.  Acts.  1897,  ch.  485,  May  21. 
Establ.  Retir.  Fund  in  Providence. 

Reports  and  statistics 

The  Publ.  School  Teachers  Retirement  Fund  in  Provi- 
dence. Extract  from  report  of  R.  J.  Condon.  1910, 
1 1 -p.  pamphlet. 

Describing  the  development  of  the  fund,  its  unsatis- 
factory financial  condition  and  the  prorating  of  pen- 
sions. 

Analyzed  in  comparative  charts:  IV,  VII-IX. 

SOUTH  CAROLINA 

Laws:  See  under  Charleston. 
CHARLESTON  TEACHERS'   RETIREMENT  FUND.     Established 

1898. 

Number  of  Teachers,  157.     Non-contributory. 
Laws 

Acts  1898,  No.  544,  Jan.  29. 

Permissive   for  Charleston  to   establish   a  retirement 
fund. 
Descriptions 

Comm.  Ed.  1898-99,  v.  2,  p.  1480  (describing  law  1898). 

1903-04,  v.  2,  p.  2285  (brief  note). 
Analyzed  in  comparative  charts:  III,  IV,  VII-IX. 

UTAH 

UTAH  TEACHERS'  RETIREMENT  FUND.     Established  1913. 

Number  of  Teachers,  2,511.     Contributory. 

Laws 

Sess.  Laws  1907,  ch.  n,  Mar.  14. 

Permissive  for  cities  of  1st  and  2nd  cl.  or  any  country 
to  establish  pens.  assn. ;  reprint,  in  Sch.  Laws,  1911, 
p.  113;  in  Bur.  Ed.  Bull.  p.  165-67;  in  N.  Ed.  Assn., 
p.  317-320. 
1913,  ch.  91,  Mar.  20. 

Establ.  a  state  fund  consisting  of  a  current  and  a  per- 
manent fund,  which  any  city  or  district  may  join  if  the 
majority  of  teachers  favor  it;  amending  the  pens,  law 
regarding  ist  class  cities. 

342 


APPENDICES 

Descriptions 

Carn.  Found.  1912,  p.  36  (describes  law  1907). 

1914,  p.  32  (describes  law  1913). 
Analyzed  in  comparative  charts:  IV,  VII   (1907);  VIII, 

IX  (1913). 

SALT  LAKE  CITY  TEACHERS'  RETIREMENT  FUND.     Estab- 
lished 1909. 

Number  of  Teachers,  694.     Contributory. 
Laws:  See  under  Utah;  laws  1907  and  1913. 
Analyzed  in  comparative  charts:  III,  IV,  IX. 

VERMONT 
VERMONT    TEACHERS'     RETIREMENT    FUND    ASSOCIATION. 

Established  1913. * 

Number  of  Teachers,  2,992.     Contributory. 
Laws 

Sess.  Laws  1910,  No.  66,  Jan.  26. 

Permissive  for  any  town  or  district  to  pay  pension, 
repr.  in  N.  Ed.  Assn.,  p.  320. 
1912,  No.  70,  Jan.  29. 
Establ.  a  state-wide  system. 
Descriptions 

Comm.  Ed.  1911,  v.  I,  p.  98  (describes  law  1910). 
Carn.  Found.,  1914,  p.  32  (describes  law  1912). 
Reports  and  statistics 

Vermont  Teachers'  Retirement  Fund  Association,  2-p. 
leaflet.  1916.  Appeal  to  the  teachers  to  raise  money 
for  the  fund. 

Carnegie  Found.  Bulletin  12,  1918.    p.  30-35.    Suggested 
System  of  Retirement  Allowances  (outline  of  the  pro- 
posed plan,  its  theory  and  statistical  basis). 
Analyzed  in  comparative  charts:  IV,  IX. 

VIRGINIA 

VIRGINIA  RETIRED  TEACHERS'  FUND.    Established  1908. 
Number  of  Teachers,  13,120.     Contributory. 
Laws 

Sess.  Acts  1908,  ch.  313,  Mar.  14. 

State-wide,  reprint,  in  Bd.  Ed.  Bull.  p.  167-169. 
1910,  ch.  97,  Mar.  9  (amending  law  1908). 
1912,  ch.  329,  Mar.  15. 

1See  Chapter  XVIII  and  Appendix  3  (g)  regarding  a  new  law  enacted 
in  April,  1919. 

343 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

Supplem.  L.  re  disability  and  reentering  the  service; 
reprint,  in  N.  Ed.  Assn.,  p.  320-324. 
State  Bd.  of  Educ.,  Teachers'  Retir.  Fund,  7  p. 

Acts  1908,  1910,  1912. 
Reports  and  statistics 

Binford,  J.  H.    Some  facts  concerning  the  retired  teach- 
ers' fund ;  an  article  in  the  Virginia  Journal  of  Educa- 
tion, June  1911,  p.  593-95. 
Receipts  and  disbursements,  July  1914-15,   I   mimeogn 

page. 
Descriptions 

Comm.  Ed.  1908,  v.  I,  p.  104  (describes  L.  1908). 
1909,  v.  i,  p.  119  (explanatory  note). 
1912,  v.  i,  p.  66  (describes  amend.  1912). 
Carn.  Found.     1912,  p.  26  (describes  fund's  condition). 
Analyzed  in  comparative  charts:  III,  IV,  VI-IX. 
For  a  history  and  criticism  of  this  fund,  see  p.  198. 

WASHINGTON 

Senate  Bill,  131,  ch.  48,  acts  1913  (defeated). 
Descriptions 

Carn.  Found.  1914,  p.  33. 

Describes  defeated  pens.  bill. 
Analysed  in  comparative  charts:  VIII   (Pens.  bill). 

WISCONSIN 
WISCONSIN  TEACHERS'  INSURANCE  AND  RETIREMENT  FUND. 

Established  1911. 

Number  of  Teachers,  14,597.     Contributory. 
Laws 

For  laws  prior  to  1911,  see  under  Milwaukee. 
Sess.  Laws,  1911,  ch.  323,  June  10. 

State-wide,  repr.  in  N.  Ed.  Assn.,  p.  324-328. 
1911,  ch.  664,  amendment. 

Rules  and  Regulations,  Law  1915,  i6-p.  booklet. 
Reports  and  statistics 

Statement  of  the  Teachers'  Insur.  and  Retir.  Fund. 
5-p.  mimeographed  copy  (Receipts  and  disbursements 
for  the  years  1912-1915). 

Reports  of  the  Secretary  of  the  Bd.  of  Trustees,  19 14,. 
5-p.  mimeographed  copies  (membership,  pension  roll,, 
average  annuities,  etc.) 
Descriptions 

Carn.  Found.  1912,  p.  27.     (Describes  law  1911.) 

344 


APPENDICES 

Borden,  J.  B.,  The  problem  of  teachers'  pensions  in  Wis- 
consin.   In  Wise.  Jo.  of  Educ.  Feb  and  Mar.  1911,  p. 
^  35-37,  64-66. 
Comm.  Ed.  1907,  v.  I,  p.  451  (describes  law  1907). 

1911,  v.  i,  p.  97  (describes  law  1911). 
Herfurth,  Elizabeth  M.     The  teachers'  fund  movement. 
In  Wise.  Teachers'  Assn.     Proceedings   1909,   1910, 
p.  204-17. 
Analyzed  in  comparative  charts  III,   VII-IX.      See   also 

under  Milwaukee. 

For  a  history  and  criticism  of  this  fund,  see  p.  193. 
MILWAUKEE  TEACHERS'   RETIREMENT   FUND.     Established 

1907. 

Number  of  Teachers,  1,691.     Contributory. 
Laws 

Sess.  Laws  1907,  ch.  in,  Mar.  14,  creating  sec.  925-XX 
of  the  statute. 

Establ.   in  pension   fund,   in  Milwaukee,;   reprint,   in 
Bur.  Ed.  Bull.  p.  169-71. 
1909,  ch.  510,  June  16. 

Abolishing  city's  contribution  of  I  per  cent  of  school 
tax;  substituting  new  law  for  the  old  law. 
Sess.  Laws  1911,  ch.   189,  May  25  amending  L.   1909. 
Authorizing  a  city  contribution  of  I  per  cent  of  school 
tax,  max.  amount  equal  to  teachers'  contributions. 
Descriptions 

Comm.  Ed.  1907,  v.  I,  p.  451. 

Describes  law   1907;  question  of  compulsion.     1909, 
v.  i,  p.  1  20  (describes  law  1909). 
Analyzed  in  comparative  charts:  IV,  VII   (1909);  VIII, 

IX  (1911). 
Reports  and  statistics 

Law  1909-1911.     Retirement  fund  in  cities  of  1st  class. 

(A  two-page  leaflet.) 
Secretary  of  the  Board  of  Trustees.    Report  for  the  year 


Five-page  mimeographed  copy. 

Membership,  pension  roll,  average  annuity,  etc. 

WYOMING 
Descriptions 

Carn.  Found.  1914,  p.  34. 

Agitation  for  pens,  legislation. 

345 


APPENDIX  3 

LAWS  PROVIDING  FOR  SOUND  TEACHERS' 

PENSION    SYSTEMS 

(a)  Massachusetts 

Acts  of  1913,  Chapter  832. — An  Act  to  Establish  a  Retirement 
System  for  Public  School  Teachers 

CONSTRUCTION 

Section  i.  The  following  words  and  phrases  as  used  in  this  act,  un- 
less a  different  meaning  is  plainly  required  by  the  context,  shall  have  the 
following  meanings : 

(1)  "Retirement    system"    shall    mean   the   arrangement   provided    in 
this  act  for  payment  of  annuities  and  pensions  to  teachers. 

(2)  "Annuities"    shall    mean    payments    for    life    derived    from    con- 
tributions from  teachers.     "Annuities-certain"  shall  mean  payments  for  a 
definite  number  of  years  only,  derived  from  contributions  from  teachers, 
and  the  number  of  years  during  which  the  payments  shall  be  made  shall 
be  determined  by  the  retirement  board.     (As  amended  by  chapter  233, 
General  Acts  of  1917.) 

(3)  "Pensions"  shall  mean  payments  for  life  derived  from  contribu- 
tions from  the  commonwealth. 

(4)  "Teacher"  shall  mean  any  teacher,  principal,  supervisor  or  super- 
intendent  employed   by  a   school   committee,   or  board  of   trustees,  in  * 
public  day  school  within  the  commonwealth. 

(5)  "Public    school"    shall    mean    any   day    school    conducted    within 
this    commonwealth    under    the    order    and    superintendence    of    a    duly 
elected  school  committee  and  also  any  day  school  conducted  under  the 
provisions  of  chapter  four  hundred  and  seventy-one  of  the  acts  of  the 
year  nineteen  hundred  and  eleven. 

(6)  "Regular   interest"    shall   mean   interest   at   the   rate   determined 
by  the  retirement  board  and  shall  be  substantially  that  which  is  actually 
earned,  which  shall  be  compounded  annually  on  the  last  day  of  December 
of  each  year.     (As  amended  by  chapter  257,  General  Acts  of  1916.) 

(7)  "Retirement  board"   shall  mean  the  teachers'  retirement  board, 
as  provided  in  section  four  of  this  act. 

(8)  "Retirement    association"    shall    mean    the    teachers'    retirement 
association,  as  provided  in  section  three  of  this  act. 

(9)  "Expense  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  one  in  section  five  of  this  act. 

(10)  "Annuity  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  two  in  section  five  of  this  act. 

(u)  "Pension  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  three  in  section  five  of  this  act. 

(12)  "School  year"  shall  mean  the  twelves  months  from  the  first  day 
of  July  of  any  year  to  the  thirtieth  day  of  June  next  succeeding. 

(13)  "Assessments"  shall  mean  the  annual  payments  to  the  annuity 
fund  by  members  of  the  association. 

346 


APPENDICES 

ESTABLISHMENT   OF   A   TEACHERS'  RETIREMENT    SYSTEM. 

Section  2.    A  teachers'  retirement  system  shall  be  established  on  the 
first  day  of  July,  nineteen  hundred  and  fourteen. 

TEACHERS'  RETIREMENT  ASSOCIATION 

Section    3.    A    teachers'    retirement    association    shall    be    organized 
among  the  teachers  in  the  public  schools  as  follows : 

(1)  All   teachers,   except   those   specified   in  paragraph    (3)    of   this 
section,  who  enter  the  service  of  the  public  schools   for  the  first  time 
on   or  before  July   first,   nineteen   hundred   and   fourteen,   shall   become 
thereby  members  of  the  association. 

(2)  All   teachers,   except   those   specified   in   paragraph    (3)    of   this 
section,  who  shall  have  entered  the  service  of  the  public  schools  before 
June  thirtieth,  nineteen  hundred  and  fourteen,  may  at  any  time  between 
July  first,  nineteen  hundred  and  fourteen,  and  September  thirtieth,  nine- 
teen hundred  and  fourteen,  upon  application  in  writing  to  the  commis- 
sioner   of    education,    become    members    of    the    retirement    association. 
Any  teacher   failing  to  do  so  may  thereafter  become  a  member  of  the 
retirement  board   by  paying  an  amount   equal  to  the  total   assessments, 
together  with   regular   interest  thereon,   that  he   would  have  paid  if  he 
had  joined  the   retirement  association   on   September   thirtieth,   nineteen 
hundred  and  fourteen. 

(3)  Teachers   in   the   service   of   the   public   schools   of   the   city  of 
Boston  shall  not  be  included  as  members  of  the  retirement  association.1 

STATE  TEACHERS'  RETIREMENT  BOARD 

Section  4.  (i)  The  management  of  the  retirement  system  is  hereby 
vested  in  the  teachers'  retirement  board,  consisting  of  seven  members : 
the  insurance  commissioner  for  the  commonwealth,  the  bank  commis- 
sioner for  the  commonwealth,  the  commissioner  of  education  for  the 
commonwealth,  three  members  of  the  retirement  association  and  one  other 
person.  Upon  organization  of  the  retirement  association  the  members 
thereof  shall  elect  from  among  their  number  in  a  manner  to  be  approved 
by  the  insurance  commissioner,  the  bank  commissioner  and  the  commis- 
sioner of  education,  three  persons  to  serve  upon  the  retirement  board,  one 
member  to  serve  for  one  year,  one  for  two  years  and  one  for  three 
years,  and  thereafter  the  members  of  the  retirement  association  shall 
elect  annually  from  among  their  number  in  a  manner  to  be  approved 
by  the  retirement  board  one  person  to  serve  upon  the  retirement  board 
for  the  term  of  three  years.  The  seventh  member  of  the  reitrement 
board  shall  be  elected  annually  by  the  other  six  to  serve  for  the  term  of 
one  year.  On  a  vacancy  occurring  on  the  board,  a  successor  of  such 
person  whose  place  has  become  vacant  shall  be  chosen  in  the  same 
manner  as  his  predecessor  to  serve  until  the  next  annual  election.  Until 
the  organization  of  the  retirement  association  and  the  election  of  three 
representatives  therefrom,  the  insurance  commissioner,  the  bank  com- 
missioner and  the  commissioner  of  education  shall  be  empowered  to 
perform  the  duties  of  the  retirement  board. 

(2)  The  members  of  the  retirement  board  shall  serve  without  com- 
pensation, but  they  shall  be  reimbursed  from  the  expense  fund  of  th« 
retirement  association  for  any  expenditures  or  loss  of  salary  or  wages 
which  they  may  incur  through  serving  on  the  board.  All  claims  for 

Modified  for  industrial  and  continuation  school  teachers,  by  chapter 
494,  Acts  of  1914. 

347 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

reimbursement  on  this  account  shall  be  subject  to  the  approval  of  the 
governor  and  council. 

(3)  The   retirement   board    shall   have   power   to   make   by-laws   and 
regulations    not    inconsistent    with    the    provisions    of    this    act;    and    to 
employ  a  secretary  who  shall  give  a  bond  in  such  amount  as  the  board 
shall   approve   and   clerical   and   other   assistance   as   may  be   necessary. 
The    salaries    shall   be    fixed   by   the   board,    with   the    approavl   of   the 
governor  and  council. 

(4)  The  retirement  board  shall  provide  for  the  payment  of  retirement 
allowances  and  such  other  expenditures  as  are  required  by  the  provisions 
of  this  act. 

(5)  The  retirement  board  shall  adopt  for  the  retirement  system  one 
or  more  mortality  tables,  and  shall  determine  what  rates  of  interest  shall 
be  established  in  connection  with  such  tables,  and  may  later  modify  such 
tables  or  prescribe  other  tables  to  represent  more  accurately  the  expense 
of  the  retirement  system  or  may  change  such  rates  of  interest,  and  may 
determine  the  application  of  the  changes  made. 

(6)  The  retirement  board  shall  perform  such  other  functions  as  are 
required  for  the  execution  of  the  provisions  of  this  act. 

CREATION   OF   FUNDS 

Section  5.     The  funds  of  the  retirement  system  shall  consist  of  an 
expense  fund,  an  annuity  fund  and  a  pension  fund. 

(1)  The  expense  fund  shall  consist  of  such  amounts  as  shall  be  appro- 
priated by  the  general  court  from  year  to  year  on  estimates  submittejd 
by  the  retirement  board  to  defray  the  expense  of  the  administration  of  this 
act,  exclusive  of  the  payment  of  retirement  allowances. 

(2)  The  annuity  fund  shall  consist  of  assessments  paid  by  members 
of  the  retirement  association,  and  interest  derived  from  investments  of 
the  annuity  fund.     Each  member  of  the  retirement  association  shall  pay 
into    the    annuity    fund,    by   deduction    from   his    salary   in   the   manner 
provided   in  section  nine,  paragraph   five,  of  this  act,   such  assessments 
upon  his  salary  as  may  be  determined  by  the  retirement  board.    The  rate 
of  assessment  shall  be  established  by  the  retirement  board  on  the  first  day 
of  July  of  each  year  after  a  prior  notice  of  at  least  three  months,  and 
shall  at  any  given  time  be  uniform  for  all  members  of  the  retirement 
association,  and  shall  not  be  less  than  three  per  cent  nor  more  than  seven 
per  cent  of  the  member's  salary :  provided,  however,  that  when  the  total 
sum  of  assessments  on  the  salary  of  any  member  at  the  rate  established 
by  the  retirement  board  would  amount  to  more  than  one  hundred  dollars 
or  less  than  thirty-five  dollars  for  any  school  year,  such  member  shall  in 
lieu  of  assessments  at  the  regular  rate  be  assessed  one  hundred  dollars 
a  year  or  thirty-five  dollars  a  year  as  the  case  may  be,  payable  in  equal 
instalments  to  be  assessed  for  the  number  of  months  during  which  the 
schools  of  the  community  in  which  such  member  is  employed  are  com- 
monly in  session.     Any  member  of  the  retirement  association  who  shall 
for  thirty  years   have  paid  regular  assessments  to  the  annuity  fund  as 
provided   herein,   shall   be   exempt   from   further   assessments ;   but   such 
member  may  thereafter,  if  he  so  elects,  continue  to  pay  his  assessments 
to  the  fund.    No  member  so  electing  shall  pay  further  assessments  after 
the  total  sum  of  assessments  paid  by  him  shall  at  any  time  have  amounted, 
with  regular  interest,  to  a  sum  sufficient  to  purchase  an  annuity  of  five 
hundred  dollars  at  age  sixty;  and  interest  thereafter  accruing  shall  be 
paid  to  the  member  at  the  time  of  his  retirement. 

(3)  The   pension    fund    shall    consist    of    such   amounts    as    shall   be 
appropriated  by  the  general  court  from  time  to  time  on  estimates  sub- 

348 


APPENDICES 

mitted  by  the  retirement  board  for  the  purpose  of  paying  the  pensioni 
provided  for  in  this  act. 

(4)  1Members  of  the  retirement  association,2  established  by  chapter 
five  hundred  and  thirty-two  of  the  acts  of  the  year  nineteen  hundred  and 
eleven,  as  amended,  who  enter  the  service  of  the  public  schools  shall  have 
the  full  amount  of  their  contributions,  together  with  such  interest  as 
shall  have  been  earned  thereon,  transferred  by  the  treasurer  of  the 
commonwealth  to  the  annuity  fund  established  by  paragraph  (2)  of  this 
section,  and  these  amounts  shall  thereby  become  a  part  of  their  assess- 
ments. 

PAYMENT  OF  RETIREMENT  ALLOWANCES 

Section  6  (i)  Any  member  of  the  retirement  association  may  retire 
from  service  in  the  public  schools  on  attaining  the  age  of  sixty  years,  or  at 
any  time  thereafter,  if  incapable  of  rendering  satisfactory  service  as  a 
teacher,  may,  with  the  approval  of  the  retirement  board,  be  retired  by 
the  employing  school  committee. 

(2)  Any  member  of  the  retirement  association,  on  attaining  the  age 
of  seventy  years,  shall  be  retired  from  service  in  the  public  schools. 

(3)  A    member    of    the    retirement    association    after    his    retirement 
under  the  provisions  of  paragraphs  numbered  (i)  or  (2)  of  this  section, 
shall  be  entitled  to  receive  from  the  annuity  fund,  as  he  shall  elect  at 
the  time  of  his  retirement,  on  the  basis  of  tables  adopted  by  the  retire- 
ment board: — (a)  an  annuity,   payable  in  quarterly  payments,  to  which 
the  sum  of  his  assessments  under  section  five,  paragraph  (2),  with  regular 
interest  thereon,   shall  entitle  him ;   or,    (&)    an  annuity  of  less  amount, 
as  determined  by  the  retirement  board  for  the  annuitants  electing  such 
option,  payable  in  quarterly  payments,  with  the  provision  that  if  the  annu- 
itant dies  before  receiving  payments  equal  to  the  sum  of  his  assessments 
under  section  five,  paragraph    (2),  with  regular  interest,  at  the  time  of 
his  retirement,  the  difference  between  the  total  amount  of  said  payments 
and  the  amount  of  his  contributions  with  regular  interest  shall  be  paid  to 
his  legal  representatives. 

(4)  Any   member    of    the    retirement    association    receiving   payments 
of  an  annuity  as  provided   in  paragraph  numbered    (3)    of  this   section 
shall,  if  not  rendered  ineligible  therefor  by  the  provisions  of  section  twelve 
of  this  act,  receive  with  each  quarterly  payment  of  his  annuity  an  equal 
amount  to  be  paid  from  the  pension  fund  as  directed  by  the  retirement 
board. 

(5)  Any  teacher  who  shall  have  become  a  member  of  the  retirement 
association  under  the  provisions  of  paragraph  numbered    (2)   of  section 
three,   and   who   shall  have   served   fifteen  years   or  more  in   the  public 
schools  of  the  commonwealth,  not  less  than  five  of  which  shall  imme- 
diately precede  retirement,  shall,  on  retiring  as  provided  in  paragraphs  (i) 
and   (2)   of  this  section,  be  entitled  to  receive  a  retirement  allowance  as 
follows:    (a)    such  annuity  and  pension  as  may  be  due  under  the  pro- 
visions of  paragraphs   numbered    (3)    and    (4)    of  this   section;    (&)    an 
additional  pension  to  such  an  amount  that  the  sum  of  this  additional  pen- 
sion and  the  pension  provided   in   paragraph    (4)    of   this   section   shall 
equal  the  pension  to  which  he  would  have  been  entitled  under  the  pro- 
visions  of   this   act  if   he   had   paid   thirty   assessments   on   his   average 
yearly  wage   for  the   fifteen  years  preceding  his  retirement  and  at  the 
rate  in  effect  at  the  time  of  his  retirement:  provided,  (i)  that  if  his  term 
of  service  in  the  commonwealth  shall  have  been   over  thirty  years  the 
thirty  assessments  shall  be  reckoned  as  having  begun  at  the  time  of  his 

*As  amended  by  chapter  197,  General  Acts  of  1915. 
2The  Retirement  System  established  for  State  employees. 

349 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

entering  service  and  as  drawing  three  per  cent  interest  compounded 
annually  until  the  time  of  retirement;  and  further  provided,  (2)  that  if 
the  sum  of  such  additional  pension  together  with  the  annuity  and  pension 
provided  for  by  paragraphs  numbered  (3)  and  (4)  of  this  section  is 
less  than  three  hundred  dollars  in  any  one  year,  an  additional  sum  suffi- 
cient to  make  an  annual  retirement  allowance  of  three  hundred  dollars 
shall  be  paid  from  the  pension  fund.  (As  amended  by  chapter  257,  Gen- 
eral Acts  of  1916.) 

(6)  If   at  any  time   it  is   impossible   or  impracticable  to   consult  the 
original  records  as  to  wages  received  by  a  member  during  any  period, 
the  retirement  board  shall  determine  the  pension  to  be  paid  under  para- 
graph numbered  (5)    (b)  of  this  section  in  accordance  with  the  evidence 
they  may  be  able  to  obtain. 

(7)  IIn  determining  the  retiring  allowance  of  a  member  of  the  teachers' 
retirement  association  who  prior  to  the  first  day  of  June,  nineteen  hundred 
and  twelve,  had  been  regularly  employed  by  the  commonwealth,  credit 
shall   be   given   in   the   manner   provided    for  by   paragraph    (5)    of   this 
section,   for  all  such  periods  of  employment  rendered  prior  to  the  first 
day  of  June,  nineteen  hundred  and  twelve :  provided,  however,  that  this 
paragraph    shall    not   apply   to   any   person   becoming   a   member   of    the 
teachers'    retirement    association,    after    the    first    day   of    July,    nineteen 
hundred   and   fifteen,   who,   at   the   time   of   entering  the   service   of   the 
public  schools,  was  not  a  member  of  the  retirement  association  established 
by  chapter  five  hundred  and  thirty-two  of  the  acts  of  the  year  nineteen 
hundred  and  eleven. 

(8)  Any  member  of  the  retirement  association  who  has  served  twenty 
or   more   years    in    the    public   schools   of   the    commonwealth    and   who, 
before  attaining  the  age  of  sixty,  by  reason  of  physical  or  mental  dis- 
ability, becomes  permanently  incapable  of  rendering  satisfactory  service 
as  a  teacher,  may,  with  the  approval  of  the  retirement  board,  be  retired 
by  the  employing  school  committee :  provided,  that  he  has  served  in  the 
public  schools  of  the  commonwealth  for  the  five  consecutive  years  imme- 
diately preceding  the  date  of  his  retirement.     Periods  of  leave  of  absence 
or   sickness    shall   not  be   considered  as   breaking  the   continuity   of  the 
five    consecutive    years    of    service    required    by    the    provisions    of    this 
paragraph,  but  such  periods  of  absence  or  sickness  shall  not  be  counted 
as  service.     (Added  by  chapter  233,  General  Acts  of  1917.) 

(9)  Any  member  of  the  retirement  association  shall,  upon  retirement 
under  the  provisions  of  paragraph    (8)    of  this  section,  and  during  the 
continuance  of  disability,   be  entitled  to  receive   from  the  annuity  fund, 
in    quarterly    payments,    a    sum    computed    in    accordance    with   the   pro- 
visions of  paragraph  (3)  of  this  section:  provided,  that  upon  the  approval 
of  the  retirement  board,  an  annuity-certain  based  upon  the  tables  of  the 
board  may  be  substituted   for  either  of  the  plans  provided   for  in  said 
paragraph,   and   in   case   of   the   death   of   the   annuitant   before  all   the 
instalments-certain  have  been  paid,  the  value  at  that  time  of  the  unpaid 
instalments,    as   determined   on   the   basis   of   the   tables   adopted   by  the 
retirement  board,  shall  be  paid  to  the  legal  representatives  of  the  deceased 
member's  estate ;  and  further  provided,  that  if  no  executor  or  adminis- 
trator of  the  estate  of  such  deceased  member  is  appointed  within  three 
months  after  his  death,  all  sums  due  under  this  paragraph,  not  exceeding 
one  hundred  dollars  in  any  one  case,  may  be  paid  to  such  person  or  persons 
as  appear  in  the  judgment  of  the  retirement  board  to  be  entitled  to  the 
proceeds   of   the   estate,   and   such   payment   shall  be   a   bar   to   recovery 
by  any  other  person.     (Added  by  chapter  233,  General  Acts  of  1917.) 

(10)  Any  member  of  the  retirement  association  receiving  a  payment 
1As  amended  by  chapter  197,  General  Acts  of  1915. 

350 


APPENDICES 

as  provided  in  paragraph  (9)  of  this  section,  shall,  if  not  rendered 
ineligible  therefor  by  the  provisions  of  section  twelve  of  this  act,  be 
entitled  to  receive  from  the  pension  fund  for  each  year  of  service  a 
pension  equal  to  one-thirtieth  of  the  pension  which  would  have  been 
due  him  under  the  provisions  of  this  act  if  he  had  retired  at  the  age 
of  sixty,  having  paid  thirty  annual  assessments  to  the  annuity  fund,  and 
received  an  annuity  computed  in  accordance  with  the  provisions  of  para- 
graph (3),  option  (a)  of  this  section;  provided,  howveer,  that  the  mini- 
mum annual  amount  to  be  paid  from  the  pension  fund  shall  be  such  that  a 
member  shall  receive  from  this  fund,  for  each  year  of  his  service,  one- 
thirtieth  of  two  hundred  and  fifty  dollars;  and  further  provided,  that  the 
total  retiring  allowance  shall  in  no  case  be  greater  than  the  amount 
which  the  said  member  would  receive  if  he  were  to  continue  in  service 
until  the  age  of  sixty,  contributing  annual  assessments  based  on  the 
average  salary  received  during  the  five  years  of  service  immediately 
preceding  retirement,  at  the  rate  of  assessment  in  effect  at  the  time 
of  retirement.  (Added  by  chapter  233,  General  Acts  of  1917.) 

(n)  If  a  member  is  granted  an  annuity -certain  by  the  retirement 
board,  his  total  retiring  allowance  shall  not  be  limited  to  the  total  retiring 
allowance  which  he  would  have  received  at  the  age  of  sixty,  as  provided 
in  paragraph  (10)  of  this  section,  but  the  amount  to  be  paid  from  the 
pension  fund  shall  be  the  amount  which  would  have  been  paid  from  that 
fund  if  an  annuity-certain  had  not  been  granted.  (Added  by  chapter  233, 
General  Acts  of  1917.) 

(12)  In   computing   the   amount   to   be   paid    from   the   pension    fund 
under   the   provisions   of   paragraph    (10)    of   this   section,   the   assumed 
assessments  necessary  to  complete  the  thirty  annual  assessments  shall  be 
based   on  the  average   salary   received   during  the   five  years  of   service 
immediately  preceding  retirement,  and  shall  be  at  the  rate  of  assessment 
in  effect  at  the  time  of  retirement.     Interest  on  the  amount  to  the  mem- 
ber's credit  at  the  time  of  retirement  and  on  the  assumed  assessments 
shall  be  figured  at  the  rate  of  three  per  cent.     (Added  by  chapter  233, 
General  Acts  of  1917.) 

(13)  No  member  of  the  retirement  association  shall  be  retired  under 
the   provisions   of   paragraph    (8)    of   this   section   until   the   fact  of   his 
disability  has   been   certified   to   under   path   by   an   examining  physician 
selected  by  the  employing  school  committee  and  approved  by  the  retire- 
ment board,  and  until  any  further  evidence  of  his  disability  which  the 
retirement   board   may   require   shall   have    been    furnished.      (Added   by 
chapter  233,  General  Acts  of  1917.) 

(14)  At   intervals    of    not    less    than    one    year,   any   member    of    the 
retirement  association  receiving  a  retiring  allowance  under  the  provisions 
of  this  section,  who  has  not  attained  the  age  of  sixty,  shall,   if  so  re- 
quested by  the  retirement  board,  be  re-examined  by  a  physician  selected 
by  the   retirement  board.     If  the  retirement  board  finds  that  disability 
which   prevents   satisfactory   service   as    a   teacher   no   longer   exists,    the 
retiring  allowance  shall  cease.     Refusal  to  submit  to  re-examination  shall 
be  cause  for  discontinuing  the  retiring  allowance.     (Added  by  chapter  233, 
General  Acts  of  1917.) 

(15)  If   a  teacher  ceases   to   receive  a   retiring  allowance   under  the 
provisions  of  paragraph  (14)  of  this  section,  the  amount  of  his  credit  at 
that  time  in  the  annuity  fund  shall  be  determined  on  the  basis  of  tables 
adopted  by  the  retirement  board,  and  the  said  amount  shall  be  considered 
for  the  purposes  of  this  act  to  constitute  the  sum  of  his  assessments,  with 
the  regular  interest  allowed  thereon,  to  the  time  when  his  retiring  allow- 
ance ceased.     (Added  by  chapter  233,  General  Acts  of  igi7- 

(16)  Any  member  of  the   retirement  association  who   shall  cease  to 

351 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

receive  a  retiring  allowance  under  the  provisions  of  paragraph  (14)  of 
this  section,  who  does  not  reenter  the  service  of  the  public  schools,  and 
who  does  not  withdraw  the  amount  to  his  credit  in  the  annuity  fund, 
may,  upon  attaining  the  age  of  sixty,  receive  a  retiring  allowance  com- 
puted in  accordance  with  the  provisions  of  paragraphs  (3)  and  (4)  of  this 
section,  or  may  before  attaining  the  age  of  sixty,  under  conditions  to  be 
determined  by  the  retirement  board,  upon  request  and  after  an  interval 
of  one  year,  be  entitled  to  further  re-examination  by  a  physician  selected 
by  the  retirement  board,  and  if  disability  contracted  during  service  as  a 
public  school  teacher  is  found  to  exist,  shall  again  be  entitled  to  receive 
a  retiring  allowance  under  the  provisions  of  paragraphs  (9)  and  (10) 
of  this  section.  (Added  by  chapter  233,  General  Acts  of  1917.) 

WITHDRAWAL     AND     REINSTATEMENT 

Section  7.1  (i)  Any  member  of  the  retirement  association  withdraw- 
ing from  service  in  the  public  schools,  except  for  the  purpose  of  entering 
the  service  of  the  commonwealth,  before  becoming  eligible  to  retirement 
shall  be  entitled  to  receive  from  the  annuity  fund  all  amounts  contributed 
as  assessments,  together  with  regular  interest  thereon,  in  the  manner 
hereinafter  provided. 

(2)  If  such  withdrawal  shall  take  place  before  six  annual  assessments 
have  been  paid,  the  total  amount  to  which  such   member  is  entitled  as 
determined  by  the  retirement  board  under  the  provisions  of  this  act  may 
be  paid  to  him  in  one  sum.     (As  amended  by  chapter  60,  General  Act? 
of  1916.) 

(3)  If  such  withdrawal  shall  take  place  after  six  annual  assessments 
have  been   paid  the  amount  so  refunded   shall  be  in  the   form   of  such 
annuity  for  life  based  on  the  contributions  of  such  member,  together  with 
regular  interest  thereon,  as  may  be  determined  by  the  retirement  board 
according  to  its  annuity  tables,  or  in   four  annual  instalments,  as   such 
member  may  elect.     (As  amended  by  chapter  60,  General  Acts  of  1916.) 

(4)  If  a  member  of  the  association  withdrawing  and  receiving  pay- 
ments   in    accordance    with   paragraphs   numbered    (2)    and    (3)    of   this 
section,  shall  die  before  the  amount  of  such  payments  equals  the  amount 
of  his  contributions  to  the  annuity  fund  with  regular  interest,  the  differ- 
ence between  the  amount  of  such  payments  and  the  amount  of  his  con- 
tributions with  regular  interest  shall  be  paid  to  his  legal  representatives. 

(5)  Any  member  of  the  retirement  association  who  shall  have  with- 
drawn from  service  in  the  public  schools  shall,  on  being  re-employed  in 
the  public  schools,  be  reinstated  in  the  retirement  association  in  accord- 
ance with  such  plans  for  reinstatement  as  the  retirement  board  shall  adopt. 

(6)  If  a  member  of  the  retirement  association  shall  die  before  retire- 
ment, the  full  amount  of  his  contributions  to  the  annuity  fund  with  regu- 
lar  interest  to  the   day  of   his   death   shall   be   paid   to   his   legal   repre- 
sentatives;   if,   however,   there    is    no    executor   or    administrator   of   the 
estate  of  such  deceased  member,  all  sums  due  under  this  paragraph,  not 
exceeding   one   hundred   dollars   in  any  one   case,   may  •be<  paid  to   such 
person   or  persons  as  appear   in  the  judgment   of  the  retirement  board 
to  be  entitled  to  the  proceeds  of  the  estate,  and  such  payment  shall  be  a 
bar  to  recovery  by  any  other  person.     (As  amended  by  chapter  238,  Gen- 
eral Acts  of  1916.) 

TAXATION,    ATTACHMENTS    AND    ASSIGNMENTS 

Section  8.  That  portion  of  the  salary  or  wages  of  a  member  deducted 
or  to  be  deducted  under  this  act,  the  right  of  a  member  to  an  annuity  or 

1As  amended  by  chapter  198,  General  Acts  of  1915. 

352 


APPENDICES 

pension,  and  all  his  rights  in  the  funds  of  the  retirement  sysetm  shall  be 
exempt  from  taxation,  and  from  the  operation  of  any  laws  relating  to 
bankruptcy  or  insolvency,  and  shall  not  be  attached  or  taken  upon  execu- 
tion or  other  process  of  any  court.  No  assignment  of  any  right  in, 
or  to,  said  funds  shall  be  valid.  The  funds  of  the  retirement  system,  so 
far  as  invested  in  personal  property,  shall  be  exempt  from  taxation.1 

DUTIES   OF   THE    SCHOOL   COMMITTEE 

Section  9.  (i)  The  school  committee  of  each  town  and  city  in  the 
commonwealth  shall,  before  employing  in  any  teaching  position  any  person 
to  whom  this  act  may  apply,  notify  such  person  of  his  duties  and  obli- 
gations under  this  act  as  a  condition  of  his  employment. 

(2)  On  or  before  October  first  of  each  year  the  school  committee  of 
each  town  and  city  in  the  commonwealth  shall  certify  to  the  retirement 
board  the  names  of  all  teachers  to  whom  this  act  shall  apply. 

(3)  The   school   committee   of   each   town   and   city  in   the   common- 
wealth shall,  on  the  first  day  of  each  calendar  month,  notify  the  retire- 
ment board  of  the  employment  of  new  teachers,  removals,  withdrawals, 
changes  in  salary  of  teachers,  that  shall  have  occurred  during  the  month 
preceding. 

(4)  Under  the  direction  of  the  retirement  board  the  school  committee 
of  each  town  or  city  in  the  commonwealth  shall  furnish  such  other  infor- 
mation as  the  board  may  require  relevant  to  the  discharge  of  the  duties 
of  the  board. 

(5)  The  school  committee  of  each  town  and  city  in  the  commonwealth 
shall,  as  directed  by  the  retirement  board,  deduct  from  the  amount  of  the 
salary  due  each  teacher  employed  in  the  public  schools  of  such  city  or 
town  such  amounts  as  are  due  as  contributions  to  the  annuity  fund  as 
prescribed  in  this  act,  shall  send  to  the  treasurer  of  said  town  or  city  a 
statement   as   voucher    for   such    deductions,   and   shall   send   a   duplicate 
statement  to  the  secretary  of  the  retirement  board. 

(6)  The   school   committee   of   each   town   and   city  in  the  common- 
wealth shall  keep  such  records  as  the  retirement  board  may  require. 

DUTIES   OF   BOARDS    OF   TRUSTEES 

Section  10.  In  administering  this  act  for  the  benefit  of  teachers  in 
schools  conducted  in  accordance  with  chapter  four  hundred  and  seventy- 
one  of  the  acts-  of  the  year  nineteen  hundred  and  eleven,  the  boards  of 
trustees  of  said  schools  are  hereby  authorized  and  required  to  perform 
all  the  duties  prescribed  for  school  committees  under  this  act. 

CUSTODY    AND    INVESTMENT   OF   FUNDS 

Section  n.  (i)  The  treasurer  of  each  town  or  city  in  the  common- 
wealth on  receipt  from  the  school  committee  or  board  of  trustees  of  the 

JAny  pledge,  mortgage,  sale,  assignment,  or  transfer  hereafter  made 
of  any  right,  claim,  or  interest  in  any  pension  which  has  been,  or  may 
hereafter  be  granted  by  the  commonwealth  or  by  any  county,  city  or 
town,  shall  be  void  and  of  no  effect,  and  any  person  who  shall  be  a  party 
to  such  pledge,  mortgage,  sale,  assignment  or  transfer  of  any  right, 
claim,  or  interest  in  any  pension,  or  pension  certificate,  which  has  been 
or  may  hereafter  be  granted  or  issued  by  the  commonwealth  or  by  any 
county,  city  or  town,  or  who  shall  hold  the  same  as  collateral  security 
for  any  debt  or  promise,  or  upon  any  pretext  of  such  security  or  promise, 
shall  be  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
punished  by  a  fine  not  exceeding  one  hundred  dollars.  (Chapter  75, 
General  Acts  of  1916.) 

353 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

voucher  for  deductions  from  the  teachers'  salaries  provided  for  in 
section  nine  shall  transmit,  monthly,  the  amounts  specified  in  such  voucher 
to  the  secretary  of  the  retirement  board. 

(2)  The  secretary  of  the  retirement  board  shall  monthly  pay  to  the 
treasurer   of    the    commonwealth    all    sums    collected    by   him    under    the 
provisions  of  paragraph   (i). 

(3)  All  funds  of  the  retirement  system  shall  be  in  custody  and  charge 
of  the  treasurer  of  the  commonwealth  and  the  treasurer  shall  invest  such 
funds  as  are  not  required  for  current  disbursements  in  accordance  with 
the  laws  of  the  commonwealth  governing  the  investment  of  sinking  funds. 
He  may,  whenever  he  sells  securities,  deliver  the  securities  so  sold  upon 
receiving  the  proceeds  thereof,   and   may  execute  any  or  all  documents 
necessary  to  transfer  the  title  thereto. 

(4)  The  treasurer  of  the  commonwealth  shall  make  such  payments  to 
members  of  the  retirement  association  from  the  annuity  fund  and  pension 
fund  as  the  retirement  board  shall  order  to  be  paid  in  accordance  with 
sections  six  and  seven  of  this  act. 

(5)  On,  or  before,  the  third  Wednesday  in  January,  the  treasurer  of 
the  commonwealth  shall  file  with  the  insurance  commissioner  for  the  com- 
monwealth, and  with  the  secretary  of  the  retirement  board,  a  sworn  state- 
ment exhibiting  the  financial  condition  of  the  retirement  system  on  the 
thirty-first  day  of  the  preceding  December  and  its  financial  transactions 
for  the  year  ending  at  such  date.     Such  statement  shall  be  in  the  form 
prescribed  by  the  retirement  board  and  approved  by  the  insurance  com- 
missioner. 

MEMBERSHIP    IN    OTHER    RETIREMENT    ASSOCIATIONS 

Section  12.  (i)  No  person  required  to  become  a  member  of  the 
association  under  the  provisions  of  paragraph  (i)  of  section  three  of  this 
act  shall  be  entitled  to  participate  in  the  benefits  of  any  other  teachers' 
retirement  system,  supported  in  whole  or  in  part  by  funds  raised  by 
taxation,  or  to  a  pension  under  the  provisions  of  chapter  four  hundred 
and  ninety-eight  of  the  acts  of  the  year  nineteen  hundred  and  eight,  or 
chapter  five  hundred  and  eighty-nine  of  the  acts  of  the  year  nineteen 
hundred  and  eight,  as  amended  by  chapter  six  hundred  and  seventeen 
of  the  acts  of  the  year  nineteen  hundred  and  ten. 

(2)  No  member  of  the  retirement  association  shall  be  eligible  to 
receive  any  pension  as  described  in  section  six  of  this  act,  who  is  at  the 
time  in  receipt  of  a  pension  paid  from  funds  raised  in  whole  or  in  part 
from  taxation  under  the  provisions  of  chapter  four  hundred  and  ninety- 
eight  of  the  acts  of  the  year  nineteen  hundred  and  eight,  or  chapter  five 
hundred  and  eighty-nine  of  the  acts  of  the  year  nineteen  hundred  and 
eight,  as  amended  by  chapter  six  hundred  and  seventeen  of  the  acts 
of  the  year  nineteen  hundred  and  ten,  or  of  any  other  act  providing 
pensions  for  teachers,  providing  that  this  paragraph  shall  not  be  con- 
strued as  applying  to  the  Boston  Teachers'  Retirement  Fund  Association. 

REIMBURSEMENT   OF    CITIES    AND   TOWNS 

Section  13.  (i)  Whenever,  after  the  first  day  of  July,  nineteen  hun- 
dred and  fourteen,  a  town  or  city  retires  a  teacher  who  is  not  eligible 
to  a  pension  under  the  provisions  of  section  six,  paragraph  (4)  of  this 
act,  and  pays  to  such  teacher  a  pension  in  accordance  with  chapter  four 
hundred  and  ninety-eight  of  the  acts  of  the  year  nineteen  hundred  and 
eight,  or  chapter  five  hundred  and  eighty-nine  of  the  acts  of  the  year 
nineteen  hundred  and  eight,  as  amended  by  chapter  six  hundred  and 
seventeen  of  the  acts  of  the  year  nineteen  hundred  and  ten,  and  the 

354 


APPENDICES 

school  committee  of  said  town  or  city  certifies  under  oath  to  the  retire- 
ment board  to  the  amount  of  said  pension,  said  town,  or  city  shall  be 
reimbursed  therefor  annually  by  the  commonwealth:  provided,  that  no 
such  reimbursement  shall  be  in  excess  of  the  amount,  as  determined  by 
the  retirement  board,  to  which  said  teacher  would  have  been  entitled  as  a 
pension,  had  he  become  a  member  of  the  retirement  association  under 
the  provisions  of  section  three,  paragraph  (2)  of  this  act. 

(2)  On  or  before  the  first  Wednesday  of  January  of  each  year,  the 
retirement  board  shall  present  to  the  general  court  a  statement  of  the 
amount  expended  previous  to  the  preceding  first  day  of  July  by  cities 
and  towns  in  the  payment  of  pensions  under  the  provisions  of  the  pre- 
ceding paragraph,  for  which  such  cities  and  towns  should  receive  reim- 
bursement. On  the  basis  of  such  a  statement,  the  general  court  may 
make  an  appropriation  for  the  reimbursement  of  such  cities  and  towns 
up  to  such  first  day  of  July. 

JURISDICTION  OF  COURT 

Section  14.  The  superior  court  shall  have  jurisdiction  in  equity  upon 
petition  of  the  insurance  commissioner  or  of  any  interested  party  to 
compel  the  observance  and  restrain  the  violation  of  this  act,  and  of  the 
rules  and  regulations  established  by  the  retirement  board  hereunder. 

REFERENDUM    AND    REPEAL 

Section  15.  Upon  the  petition  of  not  less  than  five  per  cent  of  the 
legal  voters  of  any  city  or  town  that  has  adopted  chapter  four  hundred 
and  ninety-eight  of  the  acts  of  the  year  nineteen  hundred  and  eight, 
this  question  shall  be  submitted,  in  case  of  a  city,  to  the  voters  of  such 
city  at  the  next  city  election,  and,  in  case  of  a  town,  to  the  voters  of 
such  town  at  the  next  annual  town  meeting,  and  the  vote  shall  be  in 
answer  to  the  question  to  be  placed  upon  the  ballot:  "Shall  an  act  passed 
by  the  general  court  in  the  year  nineteen  hundred  and  eight,  entitled,  'An 
Act  to  authorize  cities  and  towns  to  establish  pension  funds  for  teachers 
in  the  public  schools,'  be  repealed?"  and  if  a  majority  of  the  voters  voting 
thereon  at  such  election  or  meeting  shall  vote  in  the  affirmative  said  act 
shall  be  repealed  in  such  city  or  town. 

Section  16.  So  much  of  chapter  four  hundred  and  ninety-eight  of 
the  acts  of  the  year  nineteen  hundred  and  eight  as  authorizes  its  sub- 
mission to  the  voters  of  a  city  or  town  for  acceptance  after  the  passage 
of  this  act  is  hereby  repealed. 

Section  17.     This  act  shall  take  effect  upon  its  passage. 

(b)  City  of  New  York 

Laws  of  1917,  Chapter  303. — An  Act  to  Amend  the 
Greater  New  York  Charter  and  to  Repeal  Sections 
Ten  Hundred  and  Ninety-Two-a,  Ten  Hundred  and 
Ninety-Two-b,  and  Ten  Hundred  and  Ninety-Two-c 
thereof,  in  relation  to  Teachers'  Retirement  Fund 

The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly,  do  enact  as  follows : 

Section  i.  Section  ten  hundred  and  ninety-two  of  the  Greater  New 
York  charter,  as  re-enacted  by  chapter  four  hundred  and  sixty-six  of  the 
laws  of  nineteen  hundred  and  one,  and  amended  by  chapter  five  hundred 
and  thirty  of  the  laws  of  nineteen  hundred  and  two,  chapter  one  hundred 
and  seventy-seven  of  the  laws  of  nineteen  hundred  and  three,  chapter  six 
hundred  and  sixty-one  of  the  laws  of  nineteen  hundred  and  five,  chapter 

355 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

one  hundred  and  sixty-seven  of  the  laws  of  nineteen  hundred  and  seven 
and  chapter  four  hundred  and  seventy-six  of  the  laws  of  nineteen  hun- 
dred and  fourteen,  is  hereby  amended  to  read  as  follows : 

§  1092.  The  following  words  and  phrases  as  used  in  this  act,  unless 
a  different  meaning  is  plainly  required  by  the  context,  shall  have  the 
following  meanings : 

(r)  "Retirement  system"  shall  mean  the  arrangement  for  the  payment 
of  retirement  allowances,  under  the  provisions  of  this  act. 

(2)  "Retirement  association"  shall  mean  the  teachers'  retirement  asso- 
ciation provided  for  in  subdivision  B  of  this  act. 

(3)  "Retirement   board"    shall   mean   the   teachers'   retirement   board 
provided  for  in  subdivision  C  of  this  act. 

(4)  "Medical  board"  shall  mean  the  board  of  physicians  provided  for 
in  subdivision  T  of  this  act. 

(5)  "Board  of  education"  shall  mean  the  board  of  education  of  the 
city  of  New  York. 

(6)  "Public  school"  shall  mean  any  class,  school,  high  school,  normal 
school,  training  school,  vocational  school,  truant  school,  parental  school, 
and  all  schools  or  classes  conducted  under  the  order  and  superintendence 
of  the  board  of  education,  and  the  schools  or  classes  maintained  by  the 
department   of   public   charities   or  by  the   department  of   correction   in 
pursuance  of  the  rules  established  or  to  be  established  by  the  board  of 
education,  or  by  the  commissioner  of  public  charities  or  by  the  commis- 
sioner of  correction  for  schools  or  classes  maintained  by  such  commis- 
sioners, respectively. 

^7)  "Teacher"  shall  mean  the  city  superintendent  of  schools,  the 
associate  city  superintendents,  the  district  superintendents,  the  director 
and  the  assistant  director  of  the  division  of  reference  and  research,  the 
director  and  the  assistant  directors  of  the  bureau  of  compulsory  education, 
school  census  and  child  welfare,  the  members  of  the  board  of  examiners, 
the  directors  and  the  assistant  directors  of  special  branches,  the  supervisor 
and  the  assistant  supervisors  of  lectures,  all  principals,  vice-principals, 
assistants-to-principals,  heads  of  departments,  and  all  regular  and  special 
teachers  of  the  public  day  schools  of  the  city  of  New  York,  and  all  em- 
ployees of  the  board  of  education  appointed  to  regular  positions  in  the 
service  of  the  public  schools  at  annual  salaries  and  whose  appointments 
were  made  or  shall  hereafter  be  made  from  eligible  lists  prepared  as  the 
result  of  examinations  held  by  the  board  of  examiners  of  the  department 
of  education. 

(8)  "Present-teacher"  shall  mean  any  teacher  employed  in  the  public 
schools  as  a  teacher  on  the  first  day  of  August,  nineteen  hundred  and 
seventeen,  or  on  leave  of  absence  on  said  date. 

(9)  "New-entrant"  shall  mean  any  teacher  appointed  to  serve  in  the 
public    schools    after    the    first    day    of    August,    nineteen   hundred    and 
seventeen. 

(10)  "Contributor"  shall  mean  any  member  of  the  retirement  asso- 
ciation. 

(u)  "Transferred-contributor"  shall  mean  a  contributor  as  defined 
in  subdivision  I  of  this  act. 

(12)  "Beneficiary"    shall    mean    any    person    in    receipt    of   a   pension, 
an    annuity,    a    retirement    allowance,    or    other    benefit    as    provided    in 
this  act. 

(13)  "City-service"    shall    mean    any    service   as   an    employee    of   the 
city  of  New  York  or  of  any  department,  bureau,  board  or  corporation 
created  under  the  provisions  of  the  Greater  New  York  charter,  or  as  an 
employee  of  any  of  the  municipalities,  counties  or  parts  thereof  which 
are  included  within  the  boundaries  of  the  city  of  New  York  or  which 
have  been  incorporated  into  said  city. 

356 


APPENDICES 

(14)  "Prior-service"  shall  mean  all  city-service  and  all  teaching  or 
supervisory  service  in  schools  or  colleges  not  maintained  by  the  city  of 
New  York  computed  to  and  including  the  sixteenth  day  of  September, 
nineteen  hundred  and  seventeen,  in  the  case  of  a  present-teacher  and 
in  the  case  of  a  new-entrant  to  the  date  of  his  appointment  as  a  teacher, 
subject  to  the  limitations  and  restrictions  imposed  by  subdivision  H 
of  this  act. 

(15)  "Total-service"  shall  mean  all  prior-service  together  with  all  sub- 
sequent service  as  a  teacher  or  contributor  as  provided  in  this  act. 

(16)  "Service   retirement"   shall  mean  retirement   as   defined   in   sub- 
division K  of  this  act. 

(17)  "Disability  retirement"  shall  mean  retirement  as  defined  in  sub- 
division L  of  this  act. 

(18)  "Average  salary"  shall  mean  the  average  annual  salary  earnable 
by  a  contributor  for  the  ten  years  immeditely  preceding  retirement  except 
that  in  case  a  contributor  shall  retire  prior  to  the  first  day  of  January, 
nineteen  hundred  and  twenty-two,  average  salary  shall  mean  the  average 
annual  salary  earnable  by  the  contributor  since  the  first  day  of  January, 
nineteen  hundred  and  twelve. 

(19)  "Minimum    contribution"    shall    mean    (a)    the    amount    realized 
by  deducting  from  the  salary  of  a  contributor  three  per  centum  of  his 
earnable  salary  or    (b)    such  per  centum  thereof,  if  less  than  three  per 
centum,  as  shall  be  computed  to  be  sufficient,  with  regular  interest,  when 
paid  until  age  sixty-five,  to  provide  for  him  on  retirement  at  that  age 
an  annuity  which,  when  added  to  his  pension  provided  for  in  this  act, 
will  provide  a  retirement  allowance  of  fifty  per  centum  of  his  average 
salary. 

(20)  "Minimum  accumulation"  shall  mean  the  amount  created  by  the 
accumulation  of  the  minimum  contributions,   together  with  the  regular 
interest  thereon. 

(21)  "Accumulated  deductions"  shall  mean  the  total  of  the  amounts 
deducted  from  the  salary  of  a  contributor  and  standing  to  the  credit  of 
his   individual   account  in   the   annuity   savings   fund,   together   with   the 
regular  interest  thereon. 

(22)  "Regular  interest"  shall  mean  interest  at  four  per  centum  per 
annum,  compounded  annually. 

(23)  "Pension"  shall  mean  payments  for  life  derived  from  appropria- 
tions made  by  the  city  of  New  York  and  from  any  ether  sources  of  revenue 
of  the  pension  reserve  funds  as  provided  in  this  act. 

(24)  "Annuity"  shall  mean  payments  for  life  derived  from  contribu- 
tions made  by  a  contributor  as  provided  in  this  act. 

(25)  "Retirement  allowance"  shall  mean  the  pension  plus  the  annuity. 

(26)  "Pension  reserve"  shall  mean  the  present  value  computed  on  the 
basis  of  such  mortality  tables  as  shall  be  adopted  by  the  retirement  board, 
with   regular   interest,   of   the   future  payments   to  be   made  on   account 
of  any  pension  granted  under  the  provisions  of  this  act. 

(27)  "Annuity  reserve"  shall  mean  the  present  value  computed  on  the 
basis    of    such    mortality   tables    as    shall   be   adopted   by   the    retirement 
board,  with  regular  interest,  of  the  future  payments  to  be  made  on  account 
of  any  annuity  or  benefit  granted  and  based  on  the  accumulated  deduc- 
tions of  the  contributor. 

(28)  "Expense  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  one  in  subdivision  F  of  this  act. 

(29)  "Contingent  reserve  fund"  shall  mean  the  fund  provided  for  in 
paragraph  numbered  two  in  subdivision  F  of  this  act. 

(30)  "Pension  reserve   fund  number  one"   shall  mean  the  fund  pro- 
vided for  in  paragraph  numbered  three  in  subdivision  F  of  this  act. 

357 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

(31)  "Pension  reserve   fund  number  two"   shall  mean  the  fund  pro- 
vided for  in  paragraph  numbered  four  in  subdivision  F  of  this  act. 

(32)  "Annuity   savings    fund"    shall   mean   the   fund  provided   for  in 
paragraph  numbered  five  in  subdivision  F  of  this  act. 

(33)  "Annuity   reserve    fund"   shall    mean   the    fund   provided    for   in 
paragraph  numbered  six  in  subdivision  F  of  this  act. 

(34)  "Fiscal  year"  shall  mean  the  year  commencing  with  January  first 
and  ending  with  December  thirty-first  next  following. 

A.  The   retirement   system   shall   be   established   on  the  first  day  of 
August,  nineteen  hundred  and  seventeen. 

B.  A  teachers'  retirement  association  is  hereby  organized  among  the 
teachers    of    the    public    schools ;    its    membership    shall    consist    of    the 
following : 

1.  All  teachers  who  have  been  granted  or  shall  hereafter  be  granted 
permanent  licenses  pursuant  to   section  ten  hundred  and  eighty -nine. 

2.  All  teachers,  without  a  permanent  license,  who  shall  file  a  state- 
ment in  writing  with  the  retirement  board  consenting  to  membership  in 
the   retirement   association  and   to   the   deductions    for   annuity  purposes 
prescribed  in  this  act. 

3.  All  transferred-contributors. 

C.  I.    A    retirement   board    of    seven   members   is   hereby   constituted 
which  shall  consist  of  the  following: 

(a)  The  president  of  the  board  of  education. 

(b)  The  comptroller  of  the  city  of  New  York. 

(c)  Two  members  appointed  by  the  mayor  of  the  city  of  New  York, 
one  of  whom  shall  be  a  member  of  the  board  of  education ;  they  shall 
serve  until  their    successors    are    appointed.      Should    the    board-of-edu- 
cation   member   of   the   retirement  board   cease  to  be  a   member   of  the 
board  of  education  he  shall  thereupon  cease  to  be  a  member  of  the  retire- 
ment board. 

(d)  Three   members   of   the   retirement   association   elected    from   the 
contributors  as  follows :  On  the  first  Thursday  of  May,  nineteen  hundred 
and    seventeen,    and    in    each   year    thereafter,    the    contributors    in   each 
public   school  shall   meet  in  their   respective  schools   at  three   o'clock  in 
the  afternoon,  or  if  the  administrative  conditions  in  any  school  are  such 
that   the   meeting   ought   to   be   held   at   some   other   hour,   then   at   such 
hour   in    said   school   as    shall   be   designated  by   the   city   superintendent 
of    schools    after    consultation    with    the    principal    of    said    school;    the 
principal  of  the  school,  and  in  his  absence  the  acting  principal,  shall  call 
the  meeting  to  order,  and  the  contributors  present  at  the  meeting  shall 
proceed  to  elect  from  their  number  by  ballot  a  chairman  and  a  secretary, 
and  shall  then  elect  from  their  number  by  ballot  one  delegate  for  each 
ten  contributors  and  major  fraction  thereof  in  said  school;  each  school 
shall  have  at  least  one  delegate.    At  the  close  of  the  meeting  the  secretary 
thereof    shall   transmit   to    the   district   superintendent   in   charge   of   the 
school  the  names  of  the  delegates  so  elected.     On  the  second  Thursday 
of   May,   nineteen  hundred   and   seventeen,  and  in  each  year  thereafter, 
said  delegates  shall  'meet  at  three  o'clock  in  the  afternoon  in  one  of  the 
schools    in    the    district   designated    by   the    district    superintendent;    said 
designation   shall  be  made  and  mailed  by  the  district  superintendent  to 
each   delegate  at  least  three  days  before  the  second  Thursday  of  May. 
For  the  purpose  of  attending  the  meeting  each  delegate  shall  leave  his 
school  not  later  than  two-thirty  o'clock  in  the  afternoon  on  said  second 
Thursday  of   May.     No  delegate   shall   suffer  loss  of  pay  by  reason  of 
attendance  at  said  meeting.     Said  delegates  shall  be  called  to  order  by 
the)  principal  of  the   school,  and  in  his   absence  by  the  acting  principal 
of  the  school,  in  which  the  meeting  is  held.    Two-thirds  of  the  delegates 

358 


APPENDICES 

elected  in  a  district  shall  constitute  a  quorum  for  that  district.  The 
delegates  present  at  the  meeting  shall  proceed  to  elect  from  their  number 
by  ballot  a  chairman  and  a  secretary,  and  shall  then  elect  from  their 
number  by  ballot  a  representative  and  an  alternate  for  said  representative. 
Immediately  after  the  meeting,  the  secretary  thereof  shall  transmit  to 
the  secretary  of  the  board  of  education  the  name  of  the  representative 
and  the  name  of  the  alternate  so  elected.  The  representatives  shall  meet 
at  three  o'clock  in  the  afternoon  of  the  third  Thursday  of  May  in  each 
year  at  the  hall  of  the  board  of  education ;  for  the  purpose  of  attending 
said  meeting,  the  representatives  shall  leave  their  respective  schools  at  two 
o'clock  in  the  afternoon  on  said  third  Thursday  of  May.  No  representative 
shall  suffer  loss  of  pay  by  reason  of  attendance  at  said  meeting.  Said 
meeting  shall  be  called  to  order  by  the  city  superintendent  of  schools  or, 
in  his  absence,  by  the  acting  city  superintendent  of  schools ;  two-thirds 
of  the  said  representatives  shall  constitute  a  quorum ;  said  representatives 
shall  elect  from  their  number  by  ballot  a  chairman  and  a  secretary,  and 
shall  then  elect  by  ballot  a  contributor  to  serve  as  a  member  of  the  retire- 
ment board  for  three  years.  At  the  first  meeting  of  the  representatives 
after  this  act  takes  effect,  said  representatives  shall  elect  by  ballot  three 
contributors  to  serve  as  members  of  the  retirement  board ;  the  three  so 
elected  shall  determine  by  lot  their  terms  of  office  as  one,  two,  and  three 
vears,  respectively.  Should  a  vacancy  occur  among  the  members  of  the 
retirement  board  elected  by  the  representatives,  said  representatives  shall 
meet  within  ten  days  thereafter  at  a  special  meeting  at  the  call  of  the 
president  of  the  board  of  education,  and  they  shall  proceed  to  elect  by 
ballot  a  contributor  to  serve  on  said  retirement  board  for  the  unexpired 
term.  The  proceedings  at  this  special  meeting  shall  be  in  all  respects 
the  same  as  the  proceedings  at  the  regular  meeting  held  on  the  third 
Thursday  of  May.  Should  a  vacancy  occur  among  the  representatives, 
or  should  any  representative  be  unable  to  attend  any  meeting,  his  place 
shall  be  taken  at  said  meeting  by  his  alternate. 

(e)  For  the  purpose  of  voting  for  delegates  on  the  first  Thursday 
of  May,  nineteen  hundred  and  seventeen,  all  teachers  shall  be  considered 
to  be  contributors. 

(f)  For  the  purpose  of  voting  for  delegates,  teachers  and  contributors, 
not  appointed  as  regular  teachers  to  any  public  school,  shall  be  considered 
to  be  teachers  regularly  appointed  to  teach  in  such  schools  as  the  board 
of  education  by  its  by-laws  shall  prescribe. 

2.  The  members  of  the  retirement  board  shall  serve  as  such  without 
compensation  but  shall  be  reimbursed   from  the  expense   fund   for  any 
necessary  expenditures  and  no  contributor  shall  surfer  loss  of  salary  or 
wages  through  serving  on  the  retirement  board. 

3.  The  retirement  board  shall  elect  from  its  membership  a  chairman, 
and  shall  appoint  a  secretary,  an  actuary,  and  such  medical,  clerical  and 
other  employees  as  may  be  necessary. 

4.  The  compensation  of  all  employees  of  the  retirement  board  shall 
be  fixed  by  said  retirement  board  subject  to  the  approval  of  the  board 
of  estimate  and  apportionment. 

5.  Subject  to  the  limitations  of  this  act  and  of  law,  the  retirement 
board   shall   from   time  to  time  establish   rules  and   regulations    for  the 
administration  of  the  funds  created  by  this  act  and  for  the  transaction 
of  its  business. 

6.  The  retirement  board  shall  keep  in  convenient  form  such  data  as 
shall  be  necessary  for  actuarial  valuation  of  the  various   funds  created 
l>y  this  act. 

7.  In  the  years  nineteen  hundred  and  nineteen  and  nineteen  hundred 
and  twenty-two,  and  in  every  fifth  year  thereafter,  the  actuary  of  the 

359 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

retirement  board  shall  make  an  actuarial  investigation  into  the  mortality 
and  service  experience  of  the  contributors  and  beneficiaries  as  defined 
in  this  act,  and  shall  make  a  valuation  of  the  various  funds  created  by 
this  act,  and  on  the  basis  of  such  investigation  and  valuation  the  retire- 
ment board  shall 

(a)  Adopt   for  the   retirement  system  one  or  more  mortality  tables 
and  such  other  tables  as  shall  be  deemed  necessary. 

(b)  Certify  the  rates  of  deduction  from  salary  necessary  to  pay  the 
annuities  authorized  under  the  provisions  of  this  act;  and 

(c)  Certify  the   rates  of   contribution,   expressed  as   a  percentage   of 
salary  of  new  entrants  at  various  ages,  which  shall  be  made  by  the  city 
of  New  York  to  the  contingent  reserve  fund. 

8.  Immediately    after    the    passage    of    this    act    the    actuary    of    the 
retirement  board  shall  make  such  investigation  of  the  mortality,  service,, 
and  salary  experience  of  the  teachers  as  the  retirement  board  shall  author- 
ize.    On  the  basis  of   such  investigation  and  upon  the  recommendation 
of  the  actuary  the  retirement  board  shall  adopt  such  tables  and  certify 
such  rates  as  are  required  in  sub-sections  a,  b,  and  c  of  paragraph  seven 
immediately  preceding.     On  the  basis  of  such  tables  the  actuary  of  the 
retirement    board    shall    as    soon    as    practicable    after    the    first    day   of 
August,  nineteen  hundred  and  seventeen,  make  a  valuation  of  the  various 
funds  created  by  this  act. 

9.  The  retirement  board  shall  publish  annually  a  report  certified  to 
by  each  member  showing  the  condition  of  the  various  funds  created  by 
this  act,  and  setting  forth  such  other  facts,  recommendations,  and  data, 
as  may  be  of  use  in  the  advancement  of  knowledge  concerning  teachers'" 
pensions  and  annuities;  and  said  retirement  board  shall  submit  said  report 
to  the  mayor  of  the  city  of  New  York  and  shall  file  at  least  fifty  copies 
thereof  with  the  board  of  education  for  the  use  of  said  board  and  of  its 
members;  and  at  least  one  copy  in  each  school  for  the  use  of  the  teachers 
thereof.     It   shall   also   file   one  copy   in   the   office   of   the  city   superin- 
tendent of  schools,  and  of  each  associate  city  superintendent  of  schools, 
and  of  each  district  superintendent  of  schools. 

10.  Each  member  of  the  retirement  board  shall  take  an  oath  of  office 
that   he   will,    so    far   as    it   devolves   upon   him,    diligently   and   honestly 
administer   the   affairs   of    said   retirement  board   and   that  he   will  not 
knowingly  violate  or  wilfully  permit  to  be  violated  any  of  the  provisions; 
of   law   applicable   to   this   act.     Such   oath   shall   be   subscribed   by  the 
member  making  it,  and  certified  by  the  officer  before  whom  it  is  taken, 
and  shall  be  immediately  filed  in  the  office  of  the  clerk  of  the  county  of 
New  York. 

11.  The  concurrence  of  the  comptroller  or  of  one  member  appointed 
by  the  mayor,  of  a  member  elected  by  the  retirement  association,  and  of 
at  least  two  other   members   shall  be  necessary   for  a   decision   of   the 
retirement  board. 

12.  The  retirement  board  shall  keep  a  record  of  all  its  proceeding* 
open  to  public  inspection. 

13.  The  retirement  board  shall  perform  such  other  functions  as  are 
required  for  the  execution  of  the  provisions  of  this  act. 

D.  For  the  purposes  of  this  act,  the  retirement  board  shall  possess 
the  powers  and  privileges  of  a  corporation,  and  as  such  may  sue  and  be 
sued.    The  corporation  counsel  of  the  city  of  New  York  shall  be  the  legal 
adviser  of  said  retirement  board. 

E.  The  funds  created  by  this  act  shall  be  managed  as  follows : 

I.  The  members  of  the  retirement  board  shall  be  the  trustees  of  the 
several  funds  created  by  this  act,  and  shall  have  exclusive  control  and 
management  of  said  funds,  and  shall  have  full  power  to  invest  the  same, 

360 


APPENDICES 

subject,  however,  to  all  the  terms,  conditions,  limitations,  and  restrictions 
imposed  by  this  act  upon  the  making  of  investments  and  subject  also 
to  the  terms,  conditions,  limitations,  and  restrictions  imposed  by  law 
upon  savings  banks  in  the  making  and  disposing  of  investments  by 
savings  banks;  and,  subject  to  like  terms,  conditions,  limitations,  and 
restrictions,  said  trustees  shall  have  full  power  to  hold,  purchase,  sell, 
assign,  transfer,  or  dispose  of  any  of  the  securities  and  investments 
in  which  any  of  the  funds  created  by  this  act  shall  have  been  invested  as 
well  as  of  the  proceeds  of  said  investments,  and  of  any  moneys  belonging 
to  said  funds.  The  retirement  board  shall  annually  allow  regular  interest 
on  each  of  the  funds  as  provided  for  in  this  act  with  the  exception  of 
the  expense  fund  and  pension  reserve  fund  number  two.  The  amount 
so  allowed  shall  be  due  and  payable  to  said  funds  and  shall  be  annually 
credited  thereto  by  the  retirement  board. 

2.  The  comptroller  of  the  city  of  New  York  shall  be  the  custodian 
of  the  several  funds  created  by  this  act. 

3.  Payments  from  the  funds  created  by  this  act  shall  be  made  by  the 
comptroller  of  the  city  of  New  York  upon  warrant  signed  by  the  chair- 
man and  countersigned  by  the   secretary  of  the   retirement  board;  and 
no  warrant  shall  be  drawn  except  by  order  of  the  retirement  board  duly 
entered  in  the  record  of  its  proceedings. 

4.  For  the  purpose  of  meeting  disbursements  for  pensions,  annuities 
and   other   payments   in   excess   of   the   receipts,   there   may  be  kept  an 
available  fund,  not  exceeding  ten  per  centum  of  the  total  amount  in  the 
several  funds  created  by  this  act,  on  deposit  in  any  bank  in^this  State, 
organized  under  the  laws  thereof  or  under  the  laws  of  the  United  States, 
or  with  any  trust  company  incorporated  by  any  law  of  this  State,  pro- 
vided said  bank  or  trust  company  shall  furnish  adequate  security  for  said 
funds  and  provided  that  the  sum  so  deposited  in  any  one  bank  or  trust 
company  shall  not  exceed  twenty-five  per  centum  of  the  paid-up  capital 
and  surplus  of  said  bank  or  trust  company. 

5.  Except  as   herein  provided   no  member  and   no   employee  of   the 
retirement  board  shall  have  any  interest,  direct  or  indirect,  in  the  gains 
or  profits  of  any  investment  made  by  the  retirement  board,  nor  as  such, 
directly   or   indirectly,   receive   any   pay   or  emolument   for   his   serivces. 
And  no  member  or  employee  of  said  retirement  board,  directly  or  indi- 
rectly, for  himself  or  as  an  agent  or  partner  of  others,  shall  borrow  any 
of  its  funds  or  deposits,  or  in  any  manner  use  the  same  except  to  make 
such  current  and  necessary  payments  as  are  authorized  by  the  retirement 
board ;    nor    shall   any   member    or    employee    of    said    retirement   board 
become  an  endorser  or  surety  or  become  in  any  manner  an  obligor  for 
moneys  loaned  by  or  borrowed  of  said  retirement  board. 

F.  The  funds  hereby  created  are  the  expense  fund,  the  contingent 
reserve  fund,  pension  reserve  fund  number  one,  pension  reserve  fund 
number  two,  the  annuity  savings  fund  and  the  annuity  reserve  fund. 

1.  The    expense    fund    shall    consist    of    such    amounts    as    shall   be 
appropriated  by  the  board  of  estimate  and  apportionment,  on  estimates 
submitted  by  the  retirement  board,  to  defray  the  expenses  of  the  admin- 
istration of  this  act,  exclusive  of  the  payment  of  pensions,  of  annuities, 
of    retirement   allowances,    and   of   the   other   benefits    provided    for   in 
this  act. 

2.  Beginning  in  the  month  of  August,  nineteen  hundred  and  seventeen, 
the  city  of  New  York  shall  pay  each  month  into  a  fund  to  be  known  as 
the  contingent  reserve  fund,  on  account  of  each  new-entrant  who  is  a 
contributor,  such  amount  as  shall  be  certified  by  the  retirement  board  as 
necessary  to  provide  during  the  prospective  active  service  of  such  new- 
entrant  for  the  death  benefit  and  for  the  pension  reserve  required  at  the 

361 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

time  of  retirement  to  pay  the  disability  or  service  pension  allowable 
by  the  city  under  the  provisions  of  this  act.  The  amount  so  certified 
by  the  retirement  board  shall  be  computed  to  bear  a  constant  ratio  to  the 
salary  of  such  new-entrant  during  his  entire  period  of  prospective  active 
service  and  shall  be  based  on  such  mortality  and  other  tables  as  shall 
be.  adopted  by  the  retirement  board,  and  on  regular  interest.  Beginning 
in  the  year  nineteen  hundred  and  eighteen  the  city  of  New  York  shall 
further  pay  each  year  into  the  said  contingent  reserve  fund  one  million 
dollars  on  account  of  present-teachers,  which  payment  shall  continue 
until  the  present  value  of  such  amounts  so  paid  into  the  contingent  reserve 
fund,  together  with  the  amounts  restored  to  the  contingent  reserve  fund 
from  pension  reserve  fund  number  one  on  account  of  present-teachers 
restored  to  active  service,  shall  equal  the  present  value  of  all  amounts 
which  have  been  transferred  from  the  contingent  reserve  fund  to  pension 
reserve  fund  number  one  on  account  of  present-teachers  plus  the  present 
value  of  all  amounts  thereafter  to  be  transferred  from  the  contingent 
reserve  fund  to  said  pension  reserve  fund  number  one  on  account  of 
present-teachers ;  said  amounts  shall  be  computed  on  the  basis  of  such 
mortality  and  other  tables  as  shall  be  adopted  by  the  retirement  board, 
and  on  regular  interest. 

3.  Upon   the   retirement  of   a   new-entrant,   an   amount  equal   to   his 
pension   reserve   shall   be  transferred   from   the   contingent  reserve   fund 
into  a  fund  to  be  known  as  pension  reserve  fund  number  one ;  his  pension 
shall  be  paid  from  said  pension  reserve  fund  number  one.     Should  said 
new-entrant  be  subsequently  restored  to  active  service  his  pension  reserve 
shall   thereupon  be  transferred   from  pension   reserve   fund  number  one 
to  the  contingent  reserve  fund.    Upon  the  retirement  of  a  present-teacher, 
an  amount  equal  to  the  amount  of  his  accumulated  deductions  not  ex- 
ceeding the  amount  of  his  pension  reserve  shall  be  transferred  from  the 
contingent  reserve  fund  into  pension  reserve  fund  number  one ;  a  pension 
which    shall    be   the   actuarial   equivalent   of   the   amount    so    transferred 
shall  be  paid  to  said  retired  present-teacher  from  pension  reserve  fund 
number   one.     Should    said   present-teacher   be    subsequently   restored   to 
active   service  the   pension   reserve   on   such   pension   shall   thereupon  be 
transferred    from    pension    reserve    fund   number   one   to   the   contingent 
reserve  fund. 

4.  Pension  reserve  fund  number  two  shall  consist  of  the  following: 

(a)  The  balance  remaining  in  the  permanent  fund  of  the  retirement 
fund  of  the  board  of  education  of  the  city  of  New  York  on  the  thirty-first 
day  of  July,  nineteen  hundred  and  seventeen. 

(b)  The  balance  remaining  in  the   retirement   fund  of  the  board  of 
education  of  the  city  of  New  York  on  the  thirty-first  day  of  July,  nineteen 
hundred    and    seventeen. 

(c)  Five  per  centum  of  all  excise  moneys  or  license   fees  belonging 
to  the  city  of  New  York,  and  derived  or  received  by  any  commissioner 
of  excise  or  public  officer  from  the  granting  of  licenses  or  permission 
during  the  year  nineteen  hundred  and  seventeen  to  sell  strong  or  spirituous 
liquors,  ale,  wine,  or  beer  in  the  city  of  New  York  under  the  provisions 
of   any  law   of   this    State   authorizing  the  granting  of    such   license   or 
permission. 

(d)  The   donations,  legacies,   and  gifts  which   may  be   made  to   the 
retirement  system. 

(e)  The  sums  now  due  and  which  hereafter  may  become  due  to  the 
retirement  fund  of  the  board  of  education  of  the  city  of  New  York. 

(f)  The  amounts  contributed  by  the  city  of  New  York  to   pay  the 
pensions  of  the  teachers  retired  on  or  before  the  thirty-first  day  of  July, 
nineteen  hundred  and  seventeen,  and  to  pay  that  part  of  the  pensions  and 

362 


APPENDICES 

the  other  benefits  of  present-teachers  who  shall  be  retired  or  who  shall 
become  eligible  for  retirement  after  the  thirty-first  day  of  July,  nineteen 
hundred  and  seventeen,  which  are  not  payable  from  any  other  fund 
created  by  this  act.  Pensions  and  other  benefits,  or  such  part  thereof 
allowable  to  present-teachers  and  to  present  pensioners,  provision  for  the 
payment  of  which  out  of  any  other  fund  created  by  this  act  is  not 
specifically  made,  shall  be  paid  out  of  pension  reserve  fund  number  two. 

5.  The  annuity  savings  fund  shall  consist  of  the  accumulated  deduc- 
tions from  the  salaries  of  contributors  made,  under  such  rules  and  regu- 
lations as  the  retirement  board  shall  prescribe,  as  follows : 

(a)  From   the   salary   of   each   present-teacher   who   is   a   contributor 
there  shall  be  deducted  such  per  centum  of  his  earnable  salary  as  he  shall 
elect,  provided,  however,  that  such  contributor  shall  be  limited  in  his  choice 
to  one  of  the  following  rates  : 

(1)  Three  per  centum  of  his  earnable  salary. 

(2)  Such   per   centum   of   his   earnable   salary   as   shall  be   computed 
to  be  sufficient,  with  regular  interest,  when  paid  until  age  sixty-five,  to 
provide  for  him  on  retirement  at  that  age  an  annuity  which,  when  added 
to  his  pension,  provided  for  in  this  act,  will  provide  a  retirement  allow- 
ance of  fifty  per  centum  of  his  average  salary. 

(3)  A  per  centum  of  his  earnable  salary  greater  than  three  per  centum 
thereof. 

Should  any  present-teacher,  on  becoming  a  contributor,  fail  to  make 
such  an  election,  he  shall  be  deemed  to  have  elected  a  deduction  from 
his  salary  at  the  rate  of  three  per  centum  of  his  earnable  salary. 

(b)  From  the  salary  of  each  new-entrant  who  is  a  contributor,  there 
shall  be   deducted   such  per   centum   of   his   earnable   salary  as   shall  be 
computed    to    be    sufficient,  with  regular  interest,  to  procure  for  him  on 
service   retirement   an   annuity   equal   to   twenty-five   per   centum   of   his 
average  salary ;  the  rate  per  centum  of  said  deduction  from  salary  shall 
be  based  on  such  mortality  and  other  tables  as  the  retirement  board  shall 
adopt,  together  with  regular  interest,  and  shall  be  computed  to  remain 
constant  during  his   prospective   teaching  service   prior  to   eligibility   for 
service  retirement ;  but  no  beneficiary  restored  to  duty  shall  be  required 
to  contribute  a  per  centum  of  his  earnable  salary  greater  than  the  per 
centum  thereof  which  he  was  required  to  contribute  prior  to  his  retire- 
ment 

(c)  And  the  head  of  each  department  shall  deduct  on  each  and  every 
payroll  of  a  contributor  for  each  and  every  payroll  period  subsequent  to 
July  thirty-first,  nineteen  hundred  and  seventeen,  such  per  centum  of  the 
total  amount  of  salary  earnable  by  the  contributor  in  such  payroll  period 
as  shall  be  certified  to  said  head  of  department  by  the  retirement  board 
as  proper  in  accordance  with  the  provisions  of  this  act.     In  determining 
the  amount  earnable  by  a  contributor  in  a  payroll  period  the  retirement 
board  shall  consider  the  rate  of  salary  payable  to  such  contributor  on  the 
first  day  of  each  regular  payroll  period  as  continuing  throughout  such 
payroll  period  and  it  may  omit  salary  deductions  for  any  period  less  than 
a  full  payroll  period  in  cases  where  the  teacher  was  not  a  contributor 
on  the  first  day  of  the  regular  payroll  period;  and  to  facilitate  the  making 
of  the  deductions  it  may  modify  the  deduction  required  of  any  contributor 
by  such  amount  as  shall  not  exceed  one-tenth  of  one  per  centum  of  the 
salary  upon  the  basis  of  which  the  deduction  is  to  be  made ;  the  deductions 
provided  herein  shall  be  made  notwithstanding  that  the  minimum  salaries 
provided   for   by   section   ten   hundred   and   ninety-one   shall   be   reduced 
thereby;  and  said  head  of  each  department  shall  certify  to  the  comptroller 
on  each  and  every  payroll  the  amounts  to  be  deducted ;  and  each  of  said 
amounts  so  deducted  shall  be  paid  into  said  annuity  savings   fund,  and 

363 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

shall  be  credited  together  with  regular  interest  to  an  individual  account 
of  the  contributor  from  whose  salary  the  deduction  was  made. 

6.  Upon  the  retirement  of  a  contributor,  his  accumulated  deductions 
shall  be  transferred  from  the  annuity  savings  fund  to  a  fund  to  be  known 
as  the  annuity  reserve  fund;  his  annuity  shall  be  paid  out  of  said  annuity 
reserve  fund.     Should  such  a  beneficiary  be  restored  to  active  service  his 
annuity  reserve  shall  thereupon  be  transferred  from  the  annuity  reserve 
fund  to  the  annuity  savings  fund. 

7.  No  contributor  shall  be  required  to  continue  to  contribute  to  the 
annuity  savings  fund  after  he  shall  have  become  eligible  for  service  retire- 
ment ;  all  contributions  made  thereafter  to  said  fund  shall  be  voluntary. 

G.  Regular  interest  charges  payable,  the  creation  and  maintenance 
of  reserves  in  the  contingent  reserve  fund  and  the  maintenance  of  annuity 
reserves  and  pension  reserves  as  provided  for  in  this  act  and  the  payment 
of  all  pensions,  annuities,  retirement  allowances,  refunds,  death  benefits 
and  any  other  benefits  granted  under  the  provisions  of  this  act  are  hereby 
made  obligations  of  the  city  of  New  York.  All  income,  interest,  and  divi- 
dends derived  from  deposits  and  investments  authorized  by  this  act  shall 
be  used  for  the  payment  of  the  said  obligations  of  the  city  of  New  York. 
Upon  the  basis  of  each  actuarial  determination  and  appraisal  provided  for 
in  this  act,  the  retirement  board  shall  prepare  and  submit  to  the  board  of 
estimate  and  apportionment  on  or  before  the  fifteenth  day  of  September 
in  each  year  an  itemized  estimate  of  the  amounts  necessary  to  be  appro- 
priated by  the  city  to  the  various  funds  to  complete  the  payment  of  the 
said  obligations  of  said  city  accruing  during  the  ensuing  fiscal  year.  The 
board  of  estimate  and  apportionment  and  the  board  of  aldermen  shall 
make  an  appropriation  which  shall  be  sufficient  to  provide  for  such 
obligations  of  the  city  of  New  York  and  the  amounts  so  appropriated 
shall  be  included  in  the  tax  levy  and  shall  be  paid  by  the  comptroller  into 
the  various  funds  created  by  this  act. 

H.  In  computing  the  length  of  service  of  a  contributor  for  retire- 
ment purposes  under  the  provisions  of  this  act,  full  credit  up  to  the 
nearest  number  of  years  and  months  shall  be  given  each  contributor  by 
the  retirement  board  (a)  for  all  city-service;  and  (b)  in  the  case  of 
present-teachers  for  all  teaching  or  supervisory  services  in  schools  and 
colleges  not  maintained  by  the  city  of  New  York;  and  (c)  in  the  case 
of  new-entrants  for  all  teaching  or  supervisory  service  not  exceeding 
fifteen  years,  in  schools  and  colleges  not  maintained  by  the  city  of  New 
York.  Under  such  rules  and  regulations  as  the  retirement  board  shall 
adopt,  each  teacher  shall  file  with  the  retirement  board  a  detail  state- 
ment of  all  such  service  rendered  by  him.  As  soon  as  practicable  there- 
after, the  retirement  board  shall  verify  such  statement  as  to  prior-service 
and  shall  issue  to  each  teacher  a  certificate  certifying  to  the  aggregate 
length  of  his  prior-service.  Such  certificate  shall  be  final  and  conclusive 
as  to  his  prior-service  unless  thereafter  modified  by  (a)  the  retirement 
board  upon  application  by  the  teacher;  or  (b)  by  the  board  of  education 
upon  application  by  the  teacher  or  by  the  retirement  board,  provided  such 
application  for  modification  be  made  to  said  board  of  education  within  one 
year  after  the  issuance  of  a  certificate  or  a  modified  certificate  by  the 
retirement  board.  A  certificate  for  prior-service  issued  to  a  present- 
teacher  shall  certify  the  total  length  of  prior-service  allowance  for  said 
present-teacher  through  the  sixteenth  day  of  September,  nineteen  hundred 
and  seventeen.  The  time  during  which  a  contributor  was  absent  on  leave 
of  absence  without  pay  shall  not  be  counted  in  computing  the  prior-service 
or  the  total-service  of  a  contributor,  unless  allowed  both  by  the  head  of 
the  department  in  which  the  said  contributor  was  employed  at  the  time 
said  leave  of  absence  was  granted  and  by  the  retirement  board;  the  time 

364 


APPENDICES 

during  which  a  contributor  was  absent  on  leave  of  absence  on  full  pay  or 
part  pay  from  city-service  shall  be  counted  in  computing  the  prior-service 
and  the  total-service  of  said  contributor.  For  the  purpose  of  computing 
prior-service  the  retirement  board  shall  fix  and  determine  by  appropriate 
rules  and  regulations  how  much  service  rendered  on  the  basis  of  the 
hour,  day  or  session,  or  any  other  than  a  per  annum  basis  shall  be  the 
equivalent  of  a  year  of  service.  No  allowance  shall  be  made  for  such 
service  as  a  substitute  teacher,  night  school  teacher,  vocational  school 
teacher,  or  for  any  service  rendered  in  a  position  to  which  the  con- 
tributor was  not  regularly  appointed  and  served  on  a  per  annum  salary 
unless  such  service  was  city-service.  But  all  service  allowed  by  the 
board  of  examiners  of  the  board  of  education  pursuant  to  section  ten 
hundred  and  ninety-one  shall  be  allowed  by  the  retirement  board. 

I.  Any  contributor  who  resigns  his  position  to  accept  and  who,  within 
sixty  days  thereafter,  does  accept  another  position  in  the  city-service  shall 
continue  to  be  a  contributor  while  in  said  city-service  and  shall  be  known 
as  a  transferred-contributor  provided  he  executes  and  files  with  the 
retirement  board  a  statement  in  writing  that  he  elects  to  leave  with  the 
annuity  savings  fund  his  accumulated  deductions  and  to  continue  to  con- 
tribute to  said  fund  at  a  rate  of  salary  deduction  not  less  than  the  rate 
of  deduction  theretofore  required  from  his  salary,  and  further  pro- 
vided that  he  shall  waive  and  renounce  any  present  or  prospective  benefit 
from  any  other  retirement  system  or  association  supported  wholly  or  in 
part  by  the  city  of  New  York. 

J.  Withdrawals  from  the  retirement  association  shall  be  by  resigna- 
tion, by  transfer,  or  by  dismissal. 

1.  Should  a  contributor  resign  from  the  position  by  virtue  of  which  he 
is  a  contributor  under  the  provisions  of  this  act,  or  should  he,  upon  trans- 
ferring from  such  a  position  to  another  position  in  the  city-service,  fail 
to  become  a  transferred-contributor  as  provided  in  subdivision  I  of  this 
act,  his  membership  in  the  said  retirement  association  shall  cease  and  he 
shall  be  paid  forthwith  the  full  amount  of  the  accumulated  deductions 
standing  to  the  credit  of  his  individual  account  in  the  annuity  savings  fund. 

2.  Should  a  contributor  be  dismissed  from  the  position  by  virtue  of 
which  he  is  a  contributor  under  the  provisions  of  this  act,  his  membership 
in  the  retirement  association  shall  cease  and  there  shall  be  paid  him  forth- 
with : 

(a)  Out  of  the  annuity  savings  fund  the  full  amount  of  the  accumulated 
deductions  standing  to  the  credit  of  his  individual  account ;  and 

(b)  In  addition  thereto,  out  of  pension  reserve  fund  number  two,  an 
amount  equal  to  the  contributions  made  by  him  to  the  teachers'  retire- 
ment fund  of  the  board  of  education  of  the  city  of   New  York  as  it 
existed  prior  to  the  first  day  of  August,  nineteen  hundred  and  seventeen. 

K.  Retirement  for  service  shall  be  as  follows : 

1.  Any  contributor  may  retire  for  service  upon  written  application  to 
the  retirement  board  setting  forth  at  what  time  subsequent  to  the  execu- 
tion of  said  application  he  desires  to  be  retired.     Said  application  shall 
retire  said  contributor  at  the  time  so  specified,  provided 

(a)  He  has  reached  or  passed  the  age  of  sixty-five  years  or 

(b)  If  a  present-teacher,  he  has  a  total-service  of  thirty-five  years  or 
more ;  or 

(c)  If  a  new-entrant,  he  has  a  total-service  of  thirty-five  years  or  more, 
at  least  twenty  of  which  shall  have  been  city-service. 

2.  Each  and  every  contributor  who  has  attained  or  shall  attain  the  age 
of  seventy  years  shall  be  retired  by  the  retirement  board  for  service  forth- 
with or  at  the  end  of  the  school  term  in  which  said  age  of  seventy  years 
is  attained. 

365 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

L.  Retirement  for  disability  shall  be  made  and  discontinued  as  follows : 

1.  Upon  the  application  of  the   head   of  the   department  in   which   a 
contributor  is  employed,  or  upon  the  application  of  said  contributor  or 
of  one  acting  in  his  behalf,  the  retirement  board  shall  retire  said  con- 
tributor for  disability,  provided  the  medical  board  after  a  medical  examina- 
tion  of   said   contributor   made   at   the   place   of    residence   of    said   con- 
tributor or  at  a  place  mutually  agreed  upon  shall  certify  to  the  retire- 
ment board  that  said  contributor  is  physically  or  mentally  incapacitated 
for  the  performance  of  duty  and  that  said  contributor  ought  to  be  retired 
and  provided  further  that  said  contributor  has  had  ten  or  more  years  of 
city-service. 

2.  Once  each  year,  the  retirement  board  may  require  any  disability  pen- 
sioner while  still  under  the  age  of  sixty-five  years  to  undergo  medical  ex- 
amination by  a  physician  or  physicians  designated  by  the  medical  board, 
said  examination  to  be  made  at  the  place  of  residence  of  said  beneficiary 
or  other  place  mutually  agreed  upon.     Should  the  medical  board,  as  the 
result  of   such  examination,  report  and  certify  to  the  retirement  board 
that  such   disability  beneficiary   is   no   longer   physically   or   mentally   in- 
capacitated for  the  performance  of  duty,  the  head  of  the  department  in 
which  said  beneficiary  was  employed  at  the  time  of  his  retirement  shall, 
upon  notification  by  the  retirement  board  of  such  report  of  the  medical 
board,  reappoint  said  beneficiary  to  such  a  position  as  was  held  by,  and 
at  such  a  rate  of  salary  as  was  paid  to,  said  beneficiary  at  the  time  of 
his  retirement ;  but  after  the  expiration  of  ten  years  subsequent  to  the 
retirement  of   such  beneficiary,  his   restoration   to   duty,   notwithstanding 
the  recommendation  of  the  medical  board,  shall  be  optional  with  said  head 
of  the  department. 

3.  Should  any  disability  beneficiary  while  under  the  age  of  sixty-five 
years  refuse  to  submit  to  at  least  one  medical  examination  in  any  year 
by  a  physician  or  physicians  designated  by  the  medical  board,  his  pension 
shall  be   discontinued  until  the  withdrawal   of   such   refusal   and  should 
such  refusal  continue  for  one  year,  all  his  rights  in  and  to  the  pension 
constituted  by  this  act  shall  be  forfeited. 

4.  Upon   application  of  any  beneficiary   under  the  age   of   sixty-five 
years    drawing    a    pension    or    a    retirement    allowance    under    the    pro- 
visions  of   this  act,   approved  by  the   retirement  board,    said   beneficiary 
may  be  restored  to  active  service  by  the  head  of  the  department  in  which 
said  beneficiary  was  employed  at  the  time  of  his  retirement.     Upon  the 
restoration   of   a   beneficiary  to   active   service   his    retirement   allowance 
shall  cease. 

M.     A  contributor,  on  retirement,  shall  receive  a  retirement  allowance 
which  shall  consist  of : 

1.  A    pension    calculated    as    follows : 

(a)  For  disability  retirement  twenty  per  centum  of  his  average  salary. 

(b)  For  service  retirement,  or  for  disability  retirement  after  he  becomes 
eligible    for    service    retirement,    twenty-five   per   centum    of   his    average 
salary. 

(c)  If  the  contributor  retiring  is  a  present-teacher,  he  shall  receive, 
in  addition  to  the  pension  prescribed  in  subdivisions  (a)  or  (b)  a  pension 
computed  at  the  rate  of  one-thirty-fifth  of  twenty-five  per  centum  of  his 
average  salary  for  each  year  of  prior-service  as  certified  to  said  present- 
teacher  in  the  certificate  issued  to  him  by  the  retirement  board  under  the 
provisions  of  subdivision  H  of  this  act,  but  in  no  event  shall  the  total 
pension  exceed  fifty  per  centum  of  his  average  salary. 

2.  An  annuity,  in  addition  to  the  pension,  which  shall  be  the  actuarial 
equivalent  of  his  accumulated  deductions  at  the  time  of  his  retirement, 
provided  that  in  no  case  shall  such  annuity  be  less  for  each  one  hundred 

366 


APPENDICES 

dollars  of  accumulated  deductions  of  a  present-teacher  at  the  time  of 
retirement  than  is  shown  in  the  following  schedule : 

Annuity  in  case  of  Annuity  in  case  of 

Age  at  retirement  men  teachers  women  teachers 

48  $7.20  $6.52 

49  7-34  6-64 

50  7-49  6-77 

51  7-65  6.90 

52  7-82  7-04 

53  8.00  7-19 

54  8.19  7-35 

55  8.39  7-52 

56  8.61  7-70 

57  8.84  7-89 

58  9-09  8.10 

59  9-35  8.31 

60  9-63  8.54 

61  9-93  8.79 

62  10.25  9.05 

63  10.60  9.33 

64  10.96  9.63 

65  11.36  9-95 

66  11.78  10.30 

67  12.24  10.67 

68  12.72  ii. 06 

69  13.25  11.48 

70  13.81  11.94 

N.  Upon  the  death  of  a  contributor  before  retirement  there  shall  be 
paid  to  his  estate  or  to  such  person  as  he  shall  have  nominated  by  written 
designation  duly  executed  and  filed  with  the  retirement  board  (a)  his 
accumulated  deductions;  and  in  addition  thereto  (b)  an  amount  equal 
to  the  salary  earnable  by  him  during  the  six  months  immediately  preceding 
his  death,  provided  that  at  the  time  of  his  death  he  had  attained  the 
age  of  sixty-five  years  or  had  a  total  service  of  thirty-five  years  and  was 
eligible  for  service  retirement ;  said  amount  to  be  paid  out  of  the  contin- 
gent reserve  fund  in  the  case  of  a  new-entrant,  and  out  of  pension 
reserve  fund  number  two  in  the  case  of  a  present-teacher. 

O.  At  the  time  of  his  retirement  any  contributor  may  elect  to 
receive  his  benefits  in  a  retirement  allowance  payable  throughout  life 
or  he  may  on  retirement  elect  to  receive  the  actuarial  equivalent  at  that 
time  of  his  annuity,  his  pension,  or  his  retirement  allowance  in  a  lesser 
annuity,  or  a  lesser  pension,  or  a  lesser  retirement  allowance,  payable 
throughout  life,  with  the  provision  that : 

Option  I.  If  he  die  before  he  has  received  in  payments  the  present 
value  of  his  annuity,  his  pension,  or  his  retirement  allowance,  as  it  was 
at  the  time  of  his  retirement,  the  balance  shall  be  paid  to  his  legal  repre- 
sentatives or  to  such  person,  having  an  insurable  interest  in  his  life,  as  he 
shall  nominate  by  written  designation  duly  acknowledged  and  filed  with 
the  retirement  board  at  the  time  of  his  retirement. 

Option  II.  Upon  his  death,  his  annuity,  his  pension,  or  his  retirement 
allowance,  shall  be  continued  throughput  the  life  of  and  paid  to  such 
person,  having  an  insurable  interest  in  his  life,  as  he  shall  nominate 
by  written  designation  duly  acknowledged  and  filed  with  the  retirement 
board  at  the  time  of  his  retirement. 

Option  III.    Upon  his  death,  one-half  of  his  annuity,  his  pension,  or 

367 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

his  retirement  allowance,  shall  be  continued  throughout  the  life  of  and 
paid  to  such  person,  having  an  insurable  interest  in  his  life,  as  he  shall 
nominate  by  written  designation  duly  acknowledged  and  filed  with  the 
retirement  board  at  the  time  of  his  retirement. 

Option  IV.  Some  other  benefit  or  benefits  shall  be  paid  either  to  the 
contributor  or  to  such  other  person  or  persons  as  he  shall  nominate, 
provided  such  other  benefit  or  benefits  together  with  such  lesser  annuity, 
or  lesser  pension,  or  lesser  retirement  allowance  shall  be  certified  by  the 
actuary  of  the  retirement  board  to  be  of  equivalent  actuarial  value  and 
shall  be  approved  by  the  retirement  board. 

P.  The  pensions  of  all  persons  who  are  now  receiving  a  pension 
paid  out  of  the  teachers'  retirement  fund  of  the  board  of  education 
of  the  city  of  New  York  shall  not  be  increased  or  decreased,  and  all  such 
pensions  now  due  shall  be  paid  forthwith  and  those  hereafter  becoming 
due  shall  be  paid  as  they  become  due  out  of  pension  reserve  fund  num- 
ber two. 

Q.  A  pension,  an  annuity  or  a  retirement  allowance,  granted  under 
the  provisions  of  this  act,  shall  be  paid  in  equal  monthly  instalments, 
and  shall  not  be  decreased,  increased,  revoked  or  repealed  except  as 
otherwise  provided  in  subdivision  L  of  this  act. 

R.  Subject  to  such  terms  and  conditions  and  to  such  rules  and 
regulations  as  the  retirement  board  may  adopt,  any  contributor  from 
time  to  time  may : 

(a)  Increase  or  decrease  his  rate  of  contribution  to  the  annuity  savings 
fund,  but  in  no  event  shall  the  contribution  of  a  present-teacher  be  less 
than   the   minimum   contribution,   nor    shall    the   contribution    of   a    new- 
entrant  be  at  a  rate  less  than  the  per  centum  rate  provided  for  said  new- 
entrant  in  subdivision  F-five-b  of  this  act; 

(b)  If  a  present -teacher,  withdraw  from  his  individual  account  in  the 
annuity  sayings  fund  the  amount  in  excess  of  his  minimum  accumulation ; 

(c)  Withdraw,   after   having   become    eligible    for    service    retirement, 
such  part  of  his   accumulated   deductions   as   shall  be   in  excess  of  the 
amount  necessary  to  procure  for  him  an  annuity  which  if  added  to  his  pros- 
pective pension,   will  yield   a   retirement   allowance   of   fifty  per  centum 
of  his  average  salary ; 

(d)  Borrow   from   the  retirement  board,   if   a  present-teacher  and  if 
the  application  is  made  prior  to  July  first,  nineteen  hundred  and  twenty, 
on  a  policy  of  life  insurance,  a  sum  of  money  not  exceeding  the  loan 
value  of  said  policy  as  set  forth  in  the  body  thereof,  and  at  a  rate  of 
interest  not  exceeding  five  per  centum  per  annum,  provided  that: 

1.  The    applicant    has    a    policy    of    life    insurance    in    which    he    is 
designated  as  the  assured  and  said  policy  is  issued  by  a  life  insurance 
company  permitted  to  transact  business  in  the  state  of  New  York,  and 
said  policy  is  free  from  any  liens  or  claims  and  is  in  full  force  and  effect 
at  the  time  of  the  making  of  the  loan. 

2.  The  applicant  on  securing  the  loan  shall  deposit  said  life  insurance 
policy   with   the   retirement   board   accompanied   with   an   assignment   of 
said  policy  to  the  retirement  board ;   said  assignment  shall  be   executed 
by  the  applicant  and  by  all  adult  beneficiaries  named  in  said  policy.    Should 
any  of  the  beneficiaries  named  in  said  policy  be  infants,  said  retirement 
board  shall  not  grant  the  loan  until  after  it  has  made  a  careful  investi- 
gation into  the  merits  thereof  and  an  order  has  been  made  and  entered 
by  the  supreme  court  directing  such  loan  after  due  notice  to  such  insur- 
ance company.     If,  thereafter,  the  retirement  board  shall  grant  the  loan, 
its  action  shall  be  binding  on  said  infant  beneficiaries  with  the  same  force 
and  effect  as  if  they  were  adult  beneficiaries  and  had  executed  the  assign- 
ment required  herein. 

368 


APPENDICES 

3.  After   said   policy  has   been   assigned   to   and   deposited  with   the 
retirement  board  for  the  purposes  herein  stated,  said  policy  shall  not  be 
assigned,  transferred,  or  disposed  of,  or  changed  in  any  of  its  terms  with- 
out the  written  consent  of  the  retirement  board. 

4.  The  retirement  board  shall  notify  the  life  insurance  company  carry- 
ing said  policy  of  the  assignment  thereof  and  said  assignment  shall  be 
binding  on  said  company. 

(e)  If  a  present-teacher,  retire  upon  written  application  to  the  retire- 
ment board  after  he  has  completed  thirty  years  of  service  upon  retirement 
allowance  consisting  of 

(1)  An  annuity  which  shall  be  the  actuarial  equivalent  of  his  accumu- 
lated deductions;  and,  in  addition  thereto, 

(2)  Such  pension  as  shall  be  certified  by  the  actuary  of  the  retire- 
ment board  to  have  an  actuarial  value  equivalent  to  the  reserve,  which 
would   be   in   the   contingent   reserve    fund   had   the   city   contributed   on 
account   of    such   present-teacher    from    the    date    of    his    entrance    into 
service,  in   such  manner  as   is   provided   for  the   city's   contributions   on 
behalf  of  new-entrants  in  subdivision  F,  paragraph  two,  of  this  act,  the 
amount  determined  by  the  actuary  of  the  retirement  board  to  be  necessary 
to  provide   for  the  death  benefit  and   for  the  pension   reserve   required 
at  the  time  of  retirement  to  pay  the  pension  allowable  by  the  city  as 
provided   in   this   act.     In   determining   the   amount    of    the    reserve   the 
actuary  of  the  retirement  board  shall  base  his  calculations  on  the  tables 
then  in  use  as  the  basis  for  determining  the  rates  of  contribution  required 
of  the  city  on  account  of  new-entrants. 

5.  Teachers,  hereafter  appointed  in  the  schools  or  classes  maintained 
in  the  institutions  controlled  by  the  department  of  public  charities  or  by 
the  department  of  correction,  shall  be  appointed  by  the  commissioner  of 
the  appropriate  department  upon  the  nomination  of  the  city  superintendent 
of  schools  and  shall  be  licensed  by  the  board  of  examiners  of  the  depart- 
ment of  education.     The  department  of  education  through  such  repre- 
sentatives as  it  may  designate  shall  maintain  an  effective  visitation  and 
inspection  of  all  such  schools  and  classes. 

T.  There  shall  be  a  medical  board  of  three  physicians  constituted 
as  follows : 

(a)  One  physician  appointed  to  serve  to  August  first,  nineteen  hun- 
dred and  twenty-two,  who  shall  be  appointed  by  the  members   of  the 
retirement  board  who  are  contributors. 

(b)  One  physician  appointed  to  serve  to  August  first,  nineteen  hundred 
and  twenty-one,  who  shall  be  appointed  by  the  members  of  the  retirement 
board   who   are   not   contributors. 

(c)  One  physician  appointed  to  serve  to  August  first,  nineteen  hun- 
dred and  twenty,  who  shall  be  appointed  by  the  retirement  board.     Said 
physician  shall  be  an  expert  in  women's  diseases  and  in  diseases  of  the 
nervous  system. 

Their  successors  shall  be  appointed  to  serve  for  a  term  of  three 
years ;  vacancies  shall  be  filled  for  the  unexpired  term.  All  appointments 
for  a  full  term  or  for  an  unexpired  term  shall  be  made  in  the  manner 
provided  in  this  section  for  the  original  appointment. 

U.  The  retirement  system  created  by  this  act  shall  be  subject  to 
the  supervision  of  the  department  of  insurance  in  accordance  with  the 
provisions  of  sections  thirty-nine  and  forty-five  of  the  insurance  law, 
so  far  as  the  same  are  applicable  thereto  and  are  not  inconsistent  with 
the  provisions  of  this  act. 

V.  If,  after  August  first,  nineteen  hundred  and  seventeen,  any  present- 
teacher  shall  recover  a  judgment  for  arrears  of  salary  covering  in  whole 
or  in  part  any  period  prior  to  said  date,  the  comptroller  of  the  city 

369 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

of  New  York  before  paying  said  judgment  shall  deduct  therefrom  the 
per  centum  of  salary  theretofore  contributed  by  said  teacher  to  the 
retirement  fund  of  the  board  of  education,  as  it  existed  prior  to  said  date, 
and  said  deduction  shall  be  paid  into  pension  reserve  fund  number  two. 

W.  The  right  of  a  person  to  a  pension,  an  annuity,  or  a  retirement 
allowance,  to  the  return  of  contributions,  the  pension,  annuity,  or  retire- 
ment allowance  itself,  any  optional  benefit,  any  other  right  accrued  or 
accruing  to  any  person  under  the  provisions  of  this  act,  and  the  moneys 
in  the  various  funds  created  under  this  act,  are  hereby  exempt  from  any 
state  or  municipal  tax,  and  exempt  from  levy  and  sale,  garnishment, 
attachment,  or  any  other  process  whatsoever,  and  shall  be  unassignable 
except  as  in  this  act  specifically  otherwise  provided. 

The  general  care  and  management  of  the  public  school  teachers'  retire- 
ment fund  created  for  the  former  city  of  New  York  by  chapter  two 
hundred  and  ninety-six  of  the  laws  of  eighteen  hundred  and  ninety-four, 
and  of  the  public  school  teachers'  retirement  fund  created  for  the  former 
city  of  Brooklyn,  by  chapter  six  hundred  and  fifty-six  of  the  laws  of 
eighteen  hundred  and  ninety-five,  is  hereby  given  to  the  board  of  educa- 
tion, and  the  said  funds  are  hereby  made  parts  of  the  retirement  fund 
of  the  board  of  education  of  the  city  of  New  York  created  by  this  act. 
The  board  of  education  shall  from  time  to  time  establish  such  rules  and 
regulations  for  the  administration  of  said  fund  as  it  may  deem  best,  which 
rules  and  regulations  shall  preserve  all  rights  inhering  in  the  teachers 
of  the  city  of  New  York  and  the  city  of  Brooklyn  as  constituted  prior 
to  the  passage  of  this  act ;  and  said  board  shall  make  payments  from  said 
fund  of  annuities  granted  in  pursuance  of  this  act.  The  comptroller  of 
the  city  of  New  York  shall  hold  and  invest  all  money  belonging  to  said 
fund,  and  by  direction  of  said  board  of  education,  shall  pay  out  the  same ; 
and  he  shall  report  in  detail  to  the  board  of  education  of  the  city  of 
New  York,  annually,  in  the  month  of  January,  the  condition  of  said  fund 
and  the  items  of  receipts  and  disbursements  on  account  of  the  same. 
The  said  retirement  fund  shall  consist  of  the  following,  with  the  interest 
and  income  thereof:  (i)  All  money,  pay,  compensation  or  salary,  or  any 
income  thereof  forfeited,  deducted,  reserved,  or  withheld  for  any  cause 
from  any  member  or  members  of  the  teaching  or  supervising  staff  of  the 
public  day  schools  of  the  city  of  New  York  or  of  the  normal  college  and 
training  department  of  the  normal  college  of  the  city  of  New  York,  or 
of  schools  or  classes  maintained  in  institutions  controlled  by  the  depart- 
ment of  public  charities  or  by  the  department  of  correction,  in  pursuance 
of  rules  established  or  to  be  established  by  the  board  of  education,  or  by 
the  board  of  trustees  of  the  normal  college  of  the  city  of  New  York, 
or  by  the  commissioner  of  public  charities,  or  by  the  commissioner  of 
correction  for  schools  or  classes  maintained  by  such  commissioners  re- 
spectively. The  auditor  of  the  board  of  education,  the  auditor  of  the 
board  of  trustees  of  the  normal  college,  the  commissioner  of  public 
charities,  and  the  commissioner  of  correction  shall  certify  monthly  to  the 
comptroller  the  amounts  so  forfeited,  deducted,  reserved  or  withheld 
during  the  preceding  month.  Said  amounts  shall  be  turned  into  the  said 
retirement  fund.  (2)  All  moneys  received  from  donations,  legacies,  gifts, 
bequests,  or  otherwise  for  or  on  account  of  such  fund.  (3)  Five  per 
centum  annually  of  all  excise  moneys  or  license  fees  belonging  to  the 
city  of  New  York,  and  derived  or  received  by  any  commissioner  of  ex- 
cise or  public  officer  from  the  granting  of  licenses  or  permission  to  sell 
strong  or  spirituous  liquors,  ale,  wine,  or  beer  in  the  city  of  New  York, 
under  the  provisions  of  any  law  of  this  State  authorizing1  the  granting 
of  such  license  or  permission.  (4)  One  per  centum  of  the  salaries  of 
all  members  of  the  teaching  and  supervising  staff  of  the  public  day 

370 


APPENDICES 

schools  of  the  city  of  New  York,  and  of  the  normal  college  and  training 
department  of  the  normal  college  of  the  city  of  New  York,  and  of  schools 
or  classes  maintained  in  institutions  controlled  by  the  department  of 
public  charities  or  by  the  department  of  correction  of  the  city  of  New 
York,  except  that  the  amount  deducted  from  the  salary  of  any  teacher 
or  principal  of  the  public  day  schools  of  the  city  of  New  York  or  of 
schools  or  classes  maintained  in  institutions  controlled  by  the  depart- 
ment of  public  charities  or  by  the  department  of  correction  of  the  city 
of  New  York,  in  this  manner,  shall  not  exceed  thirty  dollars  in  any  one 
year,  and  the  amount  deducted  from  the  salary  of  any  supervising  official, 
in  this  manner,  shall  not  exceed  forty  dollars  in  any  one  year.  And 
the  board  of  education,  the  board  of  trustees  of  the  normal  college,  the 
commissioner  of  public  charities,  and  the  commissioner  of  correction 
shall,  after  the  passage  of  this  act,  deduct  on  each  and  every  payroll  of 
the  said  teaching  and  supervising  staff  said  one  per  centum  from  each 
and  every  amount  earnable  in  the  period  covered  by  the  said  payroll, 
notwithstanding  the  minimum  salaries  provided  for  by  section  ten 
hundred  and  ninety-one  of  the  charter  shall  be  thereby  reduced,  and  shall 
certify  monthly  to  the  comptroller,  the  amounts  so  deducted ;  and  said 
amounts  shall  be  turned  into  the  said  retirement  fund.  All  deductions- 
made  under  the  provisions  of  this  clause  from  the  salary  of  any  person 
who  may  be  dismissed  from  the  service  for  cause,  before  said  person  shall 
have  become  eligible  for  retirement,  under  the  provisions  of  this  act,  shall 
be  refunded  to  said  person  upon  such  dismissal.  (5)  All  such  other 
methods  of  increment  as  may  be  duly  and  legally  devised  for  the  increase 
of  said  fund.  The  moneys  standing  to  the  credit  of  the  retirement  fund 
on  the  thirty-first  day  of  December,  nineteen  hundred  and  four,  after  sub- 
tracting therefrom  any  amounts  forfeited,  deducted,  reserved  or  with- 
held from  salaries  for  absences  prior  to  that  date,  which  may,  on  excuse 
of  absence,  be  refunded  after  that  date,  all  excise  moneys  of  nineteen  hun- 
dred and  four  which  may  have  been  credited  to  said  fund  on  or  before 
that  date,  and  all  interest  for  nineteen  hundred  and  four  on  said  fund, 
which  may  have  been  credited  to  said  fund  on  or  before  said  date,  shall  be 
set  apart  by  the  comptroller  as  a  permanent  fund.  The  unexpended  bal- 
ances of  the  income  of  the  teachers'  retirement  fund  for  the  year  nineteen 
hundred  and  five,  and  for  all  subsequent  years  shall  be  added  to  the  said 
permanent  fund.  The  comptroller  shall  invest  the  said  permanent  fund, 
and  the  income  thereof  may  be  used  for  the  payment  of  annuities,  but  if 
necessary,  in  order  to  carry  out  the  provisions  of  this  act,  the  board  of 
education  may  use  any  portion  of  the  permanent  fund  in  excess  of  eight 
hundred  thousand  dollars  in  the  same  manner  as  the  income  thereof. 
The  president  of  the  board  of  education,  the  chairman  of  the  committee 
on  elementary  schools  of  said  board,  the  chairman  of  the  committee  on 
high  schools  of  said  board,  the  city  superintendent  of  schools,  and  three 
members  to  be  selected  from  the  principals,  assistants  to  principals  and 
teachers  of  the  public  day  schools  shall  constitute  a  board  of  retirement. 
The  three  last-named  members  shall  be  chosen  as  follows:  On  the  sec- 
ond Thursday  of  May  in  each  year  the  principals,  assistants  to  principals 
and  teachers  in  each  district  shall  meet  at  the  call  of  the  district  super- 
intendent, which  call  he  shall  issue  at  least  one  week  before  said  meet- 
ing, and  at  a  place  within  the  district  designated  by  him,  to  select  by 
ballot  one  of  their  number  as  district  representative  to  serve  for  one 
year.  At  the  close  of  said  meeting,  the  presiding  officer  shall  transmit 
to  the  secretary  of  the  board  of  education  the  name  and  address  of 
the  district  representative  so  chosen.  The  district  representatives  shall 
meet  at  4  o'clock  in  the  afternoon  on  the  third  Thursday  of  May 
at  the  hall  of  the  board  of  education  and  choose  by  ballot  one  of 

371 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

their  number  to  serve  on  the  board  of  retirement  for  three  years  from 
the  first  day  of  the  following  June.  At  the  first  meeting  of  the  district 
representatives  after  this  law  takes  effect,  they  shall  choose  by  ballot 
three  of  their  number  to  serve  on  the  board  of  retirement,  and  the  three 
so  chosen  shall  by  lot  fix  and  determine  their  terms  of  office  as  one,  two 
and  three  years  respectively.  Should  a  vacancy  occur  among  the  members 
of  the  board  of  retirement  so  chosen,  the  district  representatives  shall 
meet  and  choose  by  ballot  one  of  their  number  to  serve  on  the  board  of 
retirement  for  the  unexpired  term.  On  the  recommendation  of  the  board 
of  retirement,  said  board  of  education  shall  have  power,  by  a  two-thirds 
vote  of  all  its  members,  to  retire  any  member  of  the  teaching  or  super- 
vising staff  of  the  public  day  schools  of  the  city  of  New  York,  or  of 
schools  or  classes  maintained  in  institutions  controlled  by  the  department 
of  public  charities  or  by  the  department  of  correction  who  is  mentally 
or  physically  incapacitated  for  the  performance  of  duty,  and  who  has 
been  engaged  in  the  work  of  teaching  or  of  school  or  college  supervision, 
or  of  examination  of  teachers  for  licenses,  or  any  two  or  more  of  these 
several  kinds  of  work,  for  a  period  aggregating  twenty  years,  fifteen  of 
which  shall  have  been  in  the  public  day  schools  in  the  city  of  New  York, 
or  in  schools  or  classes  maintained  in  institutions  controlled  by  the  depart- 
ment of  public  charities  or  by  the  department  of  correction.  And  the  board 
of  education  may  retire  from  active  service  any  member  of  the  said 
teaching  or  supervising  staff  who  shall  have  attained  the  age  of  sixty- 
five  years  and  shall  have  been  engaged  in  the  work  of  teaching  or  school 
supervision  for  a  period  aggregating  thirty  years.  On  the  recommendation 
of  the  board  of  retirement,  the  board  of  education  shall  have  power,  by  a 
two-thirds  vote  of  all  its  members,  to  retire  upon  his  or  her  own  appli- 
cation any  member  of  the  teaching  or  supervising  staff  of  the  public  day 
schools  of  the  city  of  New  York,  or  of  schools  or  classes  maintained  in 
institutions  controlled  by  the  dapartment  of  public  charities  or  by  the 
department  of  correction  who  has  been  engaged  in  the  work  of  teaching 
or  of  school  or  college  supervision,  or  of  examination  of  teachers  for 
licenses,  or  any  two  or  more  of  these  several  kinds  of  work,  for  a  period 
aggregating  thirty  years,  fifteen  of  which  shall  have  been  in  any  of  the 
said  institutions.  The  said  board  of  education  shall  also  have  power,  by 
a  two-thirds  vote  of  all  its  members,-  and  after  recommendation  to  that 
effect  shall  have  been  made  by  the  board  of  trustees  of  the  normal  col- 
lege stating  that  the  member  of  the  supervising  or  teaching  force  is 
menially  or  physically  incapacitated  for  the  performance  of  duty,  to  re- 
tire any  member  of  the  teaching  or  supervising  force  of  the  normal  col- 
lege or  of  the  training  department  of  the  normal  college  who  shall  have 
been  engaged  in  said  normal  college  or  training  department  or  elsewhere 
in  the  public  school  system  of  the  city  of  New  York  for  ten  years  and 
shall  have  been  engaged  in  the  work  of  teaching  or  of  school  or  college 
supervision  or  of  examination  of  teachers  for  licenses,  or  any  two  or 
more  of  said  several  kinds  of  work,  during  a  period  aggregating  twenty 
years.  The  said  board  of  education,  upon  the  recommendation  of  the 
trustees  of  the  normal  college  may  also,  in  its  discretion  retire  any  member 
of  the  teaching  or  supervising  force  upon  his  or  her  own  application  who 
shall  have  been  engaged  in  the  work  of  teaching  or  school  or  college 
supervision  or  examination  of  teachers  for  licenses,  or  any  two  or  more 
such  occupations,  for  a  period  aggregating  thirty  years.  Upon  such  re- 
tirement, whether  voluntary  or  otherwise,  the  person  retired  shall  be  en- 
titled to  receive  an  annuity  out  of  the  teachers'  retirement  fund  of  not 
less  than  one-half  of  the  annual  salary  paid  to  such  person  at  the  period 
of  retirement,  and  in  case  of  the  president  or  of  a  professor  to  such  an 
additional  sum  per  annum  as  will  increase  such  one-half  of  the  salary 

372 


APPENDICES 

previously  paid  if  not  an  even  multiple  of  one  thousand  dollars  to  an  even 
multiple  of  one  thousand  dollars.  Any  person  retired  under  the  provisions 
of  this  act  after  thirty  years  of  service,  except  as  hereinbefore  in  this  sec- 
tion provided  in  the  case  of  the  president  or  of  a  professor  of  the  normal 
college,  shall  receive  as  an  annuity  one-half  of  the  annual  salary  paid  to 
said  person  at  the  date  of  said  retirement,  not  to  exceed,  however,  in  the 
case  of  a  teacher  or  principal,  the  sum  of  fifteen  hundred  dollars 
per  annum,  and  in  the  case  of  a  supervising  official,  two  thousand  dol- 
lars per  annum.  And  in  no  case  shall  the  annuity  of  any  person  already 
retired  or  hereafter  to  be  retired  after  thirty  years  of  service  be  less 
than  six  hundred  dollars.  Any  person  retired  after  twenty  years  of 
service,  but  with  less  than  thirty  years  of  service,  shall  receive  an  an- 
nuity which  bears  the  same  ratio  to  the  annuity  provided  for  on  retire- 
ment after  thirty  years  of  service  as  the  total  number  of  years  of  service 
of  said  person  bears  to  thirty  years.  The  annuities  provided  for  by  this 
act  shall  be  payable  in  monthly  installments.  All  retirements  made  under 
the  provisions  of  this  act  shall  take  effect  either  on  the  first  day  of 
February  or  on  the  first  day  of  September.  The  number  of  persons  re- 
tired in  any  one  year  shall  be  so  limited  that  the  entire  amount  of  the 
annuities  to  be  paid  for  that  year  shall  not  be  in  excess  of  the  estimated 
amount  of  the  retirement  fund  applicable  to  the  payment  of  annuities  for 
that  year.  The  words  "teaching  and  supervising  staff  of  the  public  day 
schools  of  the  city  of  New  York"  as  used  in  this  section,  shall  include 
the  city  superintendent  of  schools,  the  associate  city  superintendents,  the 
district  superintendents,  the  director  and  assistant  director  of  the  division 
of  reference  and  research,  the  members  of  the  board  of  examiners,  direc- 
tors and  assistant  directors  of  special  branches,  the  supervisor  and  as- 
sistant supervisor  of  lectures,  all  principals,  vice-principals,  assistants  to 
principals,  heads  of  departments,  and  all  regular  and  special  teachers  of 
the  public  day  schools  of  the  city  of  New  York.  Nothing  in  this  act  shall 
be  construed  as  prohibiting  the  reappointment  to  active  service,  on  his  or 
her  own  application,  of  any  person  who  has  been  retired  under  the  pro- 
visions of  this  act.  Upon  the  reappointment  of  any  such  person  the  pay- 
ment of  the  annuity  of  said  person  shall  be  discontinued.  Teachers  here- 
after appointed  in  schools  or  classes  maintained  in  the  institutions  con- 
trolled by  the  department  of  public  charities  or  by  the  department  of  cor- 
rection, shall  be  appointed  by  the  commissioner  of  the  appropriate  depart- 
ment upon  the  nomination  of  the  city  superintendent  of  schools  and  shall 
be  licensed  by  the  board  of  examiners  of  the  department  of  education. 
The  department  of  education  through  such  representatives  as  it  may  desig- 
nate shall  maintain  an  effective  visitation  and  inspection  of  all  such  schools 
and  classes. 

§  2.  Section  ten  hundred  and  ninety -two-a,  as  amended  by  chapter  one 
hundred  and  seven  of  the  laws  of  nineteen  hundred  and  five,  section  ten 
hundred  and  ninety-two-b,  as  amended  by  chapter  five  hundred  and  five  of 
the  laws  of  nineteen  hundred  and  nine,  and  section  ten  hundred  and  ninety- 
two-c,  as  amended  by  chapter  six  hundred  and  thirteen  of  the  laws  of 
nineteen  hundred  and  sixteen,  are  hereby  repealed. 

§  3.  This  act  shall  take  effect  on  August  first,  nineteen  hundred  and 
seventeen,  except  as  to  subdivisions  B,  C,  D,  E,  paragraph  5 ;  subdivision 
F,  paragraph  one,  and  the  provision  of  subdivision  F,  paragraph  5,  part 
(a),  which  provides  for  the  election  of  a  rate  of  salary  deduction  by  any 
person  entitled  to  make  such  election  and  the  further  provision  of  the 
same  part  which  provides  that  if  any  person  entitled  to  make  such  elec- 
tion fails  so  to  do  he  shall  be  deemed  to  have  elected  a  deduction  from 
his  salary  at  the  rate  of  three  per  centum  of  his  earnable  salary;  sub- 
divisions H,  T,  and  U,  and  as  to  provisions  of  such  subdivisions,  para- 

373 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

graphs    and    parts    of    paragraphs    this    act    shall    take    effect    imme- 
diately. 

(c)   Pennsylvania 

Laws  of  1917,  No.  343. — An  Act. — Establishing  a  public  school, 
employes'  retirement  system,  and  creating  a  retirement  board 
for  the  administration  thereof;  establishing  certain  funds  from 
contributions  by  the  Commonwealth  and  contributing  employes, 
defining  the  uses  and  purposes  thereof  and  the  manner  of  pay- 
ments therefrom,  and  providing  for  the  guaranty  by  the  Com- 
monwealth of  certain  of  said  funds;  imposing  powers  and  duties 
upon  boards  having  the  employment  of  public  school  employes; 
exempting  annuities,  allowances,  returns,  benefits,  and  rights 
from  taxation  and  judicial  process;  and  providing  penalties. 

DEFINITIONS 

Section  i.  Be  it  enacted,  etc.,  that  the  following  words  and  phrases  as 
used  in  this  act,  unless  a  different  meaning  is  plainly  required  by  the 
context,  shall  have  the  following  meanings : 

(1)  "Retirement    System"    shall    mean    the    arrangement    for   the   pay- 
ment of  retirement  allowances  under  the  provisions  of  this  act. 

(2)  "Retirement  Association"  shall  mean  the  employes'  retirement  asso- 
ciation provided  for  in  section  three  of  this  act. 

(3)  "Retirement   Board"   shall   mean   the   employes'   retirement   board 
provided  for  in  section  four  of  this  act. 

(4)  "Superintendent   of    Public    Instruction"    shall   mean   the    Superin- 
tendent of  Public  Instruction  of  the  Commonwealth  of  Pennsylvania. 

(5)  "Public  School"  shall  mean  any  class,  school,  high  school,  normal 
school,  training  school,  vocational  school,  truant  school,  parental  school, 
and  any  or  all  classes  or  schools,  within  the  State  of  Pennsylvania,  con- 
ducted under  the  order  and  superintendence  of  the  Department  of  Public 
Instruction  of  the  Commonwealth  of  Pennsylvania  and  of  a  duly  elected 
or  appointed  board  of  public  education,  board  of  school  directors,  or  board 
of  trustees,  of  the  Commonwealth,  or  of  any  school  district  or  normal 
school  disrtict  thereof,  and  shall  include  the  officers  of  the  State  Depart- 
ment of  Public  Instruction  and  the  State  Board  of  Education. 

(6)  "Employer"    shall  mean  the  Commonwealth,  school  district,  normal 
school  district,  board,  or  other  committee  by  which  the  employe  is  paid. 

(7)  "Employe"    shall    mean    any   teacher,    principal,    supervisor,    super- 
vising principal,   county  superintendent,   district   superintendent,   assistant 
superintendent,  any  member  of  the  staff  of  the  State  normal  schools,  or 
of  the  staff  of  the  State  Department  of  Public  Instruction,  or  of  the  staff 
of   the   State   Board   of   Education,   or   any   clerk,    stenographer,    janitor, 
attendance  officer,  or  other  person  engaged  in  any  work  concerning  or 
relating  to   the  public   schools  of   this   Commonwealth,   or  in  connection 
therewith,  or  under  contract  or  engagement  to  perform  one  or  more  of 
these  functions :  Provided,  That  no  person  shall  be  deemed  an  employe, 
within  the  meaning  of  this  act,  who  is  not  regularly  engaged  in  perform- 
ing one  or  more  of  these  functions  as  a  full-time  occupation,  outside  of 
vacation  periods.     In  all  cases  of  doubt  the  retirement  board  shall  deter- 
mine whether  any  person  is  an  employe  as  defined  in  this  act. 

(8)  "Present   Employe"   shall  mean   any  employe,  as   defined   in  para- 
graph seven  of  this  section,  employed  in  any  capacity  in  connection  with 
the  public  schools  at  the  time  this  bill  becomes  a  law,  and  any  employe 
who  was  employed  prior  to  such  time  and  who  shall  become  a  contributor 
within  three  years  from  the  date  of  expiration  of  such  employment. 

(9)  "New  entrant"  shall  mean  any  employe,  as   defined  in  paragraph 

374 


APPENDICES 

seven  of  this  section,  appointed  or  elected,  or  contracting  or  otherwise 
legally  engaging,  to  serve  in  any  capacity  in  connection  with  the  public 
schools  after  this  bill  becomes  a  law. 

(iq)   "Contributor"  shall  mean  any  person  who  has  an  account  in  the 
annuity  savings  fund. 

(n)  "Beneficiary"   shall  mean   any  person   in  receipt  of  a   retirement 
allowance  or  other  benefit  as  provided  in  this  act. 

(12)  "School  Service"  shall  mean  any  service  as  an  employe  as  defined 
by  paragraph  seven  of  this  section. 

(13)  "Prior  Service"  shall  mean  all  school  service  completed  not  later 
than  the  thirtieth  day  of  June,  nineteen  hundred  and  nineteen. 

(14)  "School  Year"  shall  mean  the  official  school  year  of  the  school 
district  in  which  an  employe  is  employed. 

(15)  "Disability  Retirement"  shall  mean  retirement  as  defined  in  section 
twelve  of  this  act. 

(16)  "Superannuation  Retirement"  shall  mean  retirement  as  defined  in 
section  thirteen  of  this  act. 

(17)  "Final  Salary"  shall  mean  the  average  annual  salary,  not  exceed- 
ing $2,000,  earnable  by  a  contributor  as  an  employe  for  the  ten  years  of 
service  immediately  preceding  retirement. 

(18)  "Accumulated  Deductions"  shall  mean  the  total  of  the  amounts 
deducted  from  the  salary  of  a  contributor  and  credited  to  his  or  her  in- 
dividual account  in  the  annuity  savings  fund,  together  with  the  regular 
interest  thereon. 

(19)  "Regular  Interest"  shall  mean  interest  at  four  per  cent,  per  an- 
num, compounded  annually. 

(20)  "State  Annuity"  shall  mean  payments  for  life,  derived  from  con- 
tributions made  by  the  Commonwealth  of   Pennsylvania  as  provided  in 
this  act. 

(21)  "Employe's  Annuity"  shall  mean  payments  for  life,  derived  from 
contributions  made  by  a  contributor  as  provided  in  this  act. 

(22)  "Retirement  Allowance"  shall  mean  the  State  annuity  plus  the  em- 
ploye's annuity. 

(23)  "State  Annuity  Reserve"  shall  mean  the  present  value,  computed 
on  the  basis  of  such  mortality  tables  as  shall  be  adopted  by  the  retire- 
ment board,  with  regular  interest,  of  the  future  payments  to  be  made  on 
account  of  any  State  annuity  granted,  and  based  on  contributions  made 
by  the  Commonwealth  of  Pennsylvania. 

(24)  "Employe's  Annuity  Reserve  shall  mean  the  present  value,  com- 
puted on  the  basis  of  such  mortality  tables  as  shall  be  adopted  by  the 
retirement   board,   with    regular   interest,   of   the   future   payments   to   be 
made  on  account  of  any  employe's  annuity  granted,   and  based  on  the 
accumulated  deductions  of  the  contributor. 

(25)  "Expense  Fund"  shall  mean  the  fund  provided  for  in  paragraph 
number  two  in  section  eight  of  this  act. 

(26)  "Contingent  Reserve  Fund"  shall  mean  the  fund  provided  for  in 
paragraph  number  three  in  section  eight  of  this  act. 

(27)  "State  Annuity  Reserve  Fund"  shall  mean  the  fund  provided  for 
in  paragraph  number  four  in  section  eight  of  this  act. 

(28)  "State  Annuity  Reserve  Fund  Number  Two"  shall  mean  the  fund 
provided  for  in  paragraph  number  five  in  section  eight  of  this  act. 

(29)  "Employes'    Annuity    Savings    Fund"    shall    mean    the    fund    pro- 
vided for  in  paragraph  number  six  in  section  eight  of  this  act. 

(30)  "Employes'    Annuity    Reserve    Fund"    shall    mean    the    fund   pro- 
vided for  in  paragraph  number  seven  in  section  eight  of  this  act. 

375 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


RETIREMENT  SYSTEM 

Section  2.  The  retirement  system  shall  be  established  on  the  first  day 
of  July,  nineteen  hundred  and  nineteen. 

EMPLOYES'  RETIREMENT  ASSOCIATION 

Section  3.  An  employes'  retirement  association  is  hereby  organized, 
the  membership  of  which  shall  consist  of  the  following: 

1.  All   present   employes,   except   those   specifically   excluded   by   para- 
graph three  of  this  section,  who  by  written  application  to  the  Superin- 
tendent  of   Public   Instruction   shall   elect,  before  the   first  day  of  July, 
nineteen  hundred  and  nineteen,  to  be  covered  by  the  retirement  system. 

2.  All   new   entrants,   except  those   specifically  excluded  by  paragraph 
three  of  this  section. 

3.  Present  employes  who  are  members,  and  new  entrants  who  become 
members,  of  a  retirement  system,  maintained  under  the  laws  of  the  Com- 
monwealth from  appropriations  or  contributions  made  wholly  or  in  part 
by  any  employer,  and  existing  at  the  time  this  bill  becomes  a  law,  shall 
be  excluded  from  membership  in  this  retirement  association.     But  should 
two-thirds  of  .all  the  members  participating  in  any  such  retirement  system 
apply   for  membership  in  the  retirement  association,  by  a  petition  duly 
signed  and  verified,  approved  by  their  employer,  and  filed  with  the  re- 
tirement board,  all  the  persons  included  in  the  membership  of  such  retire- 
ment system  shall  become  members  of  the  retirement  association  at  such 
time,  within  three  months  after  the  filing  of  such  petition,  as  the  retire- 
ment board  shall  designate.     Thereupon  the  retirement  system  of  which 
they  were  members  at  the  time  they  were  included  in  the  retirement  asso- 
ciation provided  by  this  act  shall  be  dissolved  and  discontinued  as  follows : 

The  payment  of  retirement  allowances  or  other  benefits  which  were 
in  effect  at  the  time  of  such  discontinuance  shall  become  an  obligation  of 
the  employer,  shall  be  continued  as  formerly  provided  by  such  retirement 
system,  and  shall  be  paid  out  of  such  moneys,  excepting  further  contribu- 
tions of  members,  as  were  formerly  available  for  such  payment,  and  the 
employer  shall  appropriate  for  such  purpose  such  other  moneys  as  shall 
be  required. 

All  present  assets  of  such  retirement  system  at  the  time  of  its  dis- 
continuance shall  be  transferred  to  the  employer,  to  be  held  and  invested 
as  a  trust  fund  and  disbursed  only  in  payment  to  the  before-mentioned 
retired  members,  except  that  if  the  amount  of  such  present  assets  exceed 
the  present  value  of  the  future  retirement  allowances  or  other  benefits 
of  such  retired  members,  computed  on  the  basis  of  such  tables  as  the 
retirement  board  shall  have  adopted  for  similar  classes  of  annuitants, 
and  of  regular  interest,  the  amount  of  the  excess  shall  thereupon  be  trans- 
ferred to  State  annuity  reserve  fund  number  two.  Upon  the  retirement 
of  any  contributor  of  the  retirement  association  established  by  this  act, 
who  has  not  received  back  any  contributions  which  he  or  she  made  to 
such  discontinued  retirement  system,  there  shall  be  paid  from  State  an- 
nuity reserve  fund  number  two  into  employes'  annuity  reserve  fund  the 
amount  of  such  contributions,  and  he  or  she  shall  receive  therefor  such 
annuity  or  other  benefit  purchasable  therewith  as  he  or  she  may  elect, 
in  addition  to  the  other  benefits  provided  by  this  act. 

THE   RETIREMENT   BOARD 

Section  4.  A  retirement  board  of  seven  members  is  hereby  constituted,, 
which  shall  consist  of  the  following: 

(a)  The  Superintendent  of  Public  Instruction. 

(b)  The  Treasurer  of  the  Commonwealth  of  Pennsylvania. 

376 


APPENDICES 

(c)  One  member  who  shall  be  appointed  by  the  Governor  of  the  Com- 
monwealth of   Pennsylvania,  who  shall  serve  until  his  successor  is  ap- 
pointed. 

(d)  Three  members  of  the  retirement  association,  elected  from  among 
their  number  in  a  manner  to  be  approved  by  the  Superintendent  of  Public 
Instruction,  the  State  Treasurer,  and  the  member  of  the  retirement  board 
appointed   by  the   Governor, — one  to   serve   for  one  year,   one   for  two 
years,  and  one  for  three  years ;  and  whose  successors  shall  be  elected, 
for  a  term  of  three  years,  from  among  the  members  of  the  retirement 
association,  in  a  manner  to  be  approved  by  the  retirement  board. 

(e)  One  member,  not  an  employe  nor  officer  or  employe  of  the  State, 
who  shall  be  elected  annually  by  the  board,  to  serve  for  a  term  of  one 
year. 

A  vacancy  occurring  during  a  term  shall  be  filled  for  the  unexpired 
term  by  the  appointment  of  a  successor  in  the  same  manner  as  his  or 
her  predecessor.  Until  the  organization  of  the  retirement  association, 
and  the  election  of  three  representatives  therefrom,  the  Superintendent 
of  Public  Instruction,  the  State  Treasurer,  and  the  member  appointed  by 
the  Governor,  are  empowered  to  perform  the  duties  of  the  retirement 
board. 

2.  The  members  of  the  retirement  board  shall  serve  without  compensa- 
tion, but  shall  be  reimbursed  from  the  expense  fund  for  any  necessary 
expenditures,  and   no  contributor   shall   suffer  loss   of   salary  or   wages 
through  serving  on  the  retirement  board. 

3.  The  retirement  board  shall  elect,  from  its  membership,  a  chairman, 
and  shall  appoint  a  secretary,  an  actuary,  and  such  medical,  clerical,  and 
other  employes  as  may  be  necessary. 

4.  The  compensation  of  all  persons  employed  by  the  retirement  board 
shall  be  fixed  by  said  retirement  board. 

5.  Subject  to  the  limitations   of  this   act  and  of   law,   the  retirement 
board  shall,  from  time  to  time,  establish  rules  and  regulations   for  the 
administration  of  the  funds  created  by  this  act  and  for  the  transaction 
of  its  business. 

6.  The  retirement  board  shall  keep,  in  convenient  form,  such  data  as 
shall  be  necessary  for  actuarial  valuation  of  the  various  funds  created 
by  this  act. 

7.  In  the  years  nineteen  hundred  and  twenty-one  and  nineteen  hundred 
and  twenty-four,  and  in  every  fifth  year  thereafter,  the  actuary  of  the 
retirement  board  shall  make  an  actuarial  investigation  into  the  mortality 
and  service  experience  of   the  contributors   and  beneficiaries  as   defined 
in  this  act,  and  shall  make  a  valuation  of  the  various  funds  created  by 
this  act;  and,  on  the  basis  of  such  investigation  and  valuation,  the  retire- 
ment board  shall — 

(a)  Adopt   for  the  retirement  system   one   or   more  mortality  tables, 
and  such  other  tables  as  shall  be  deemed  necessary; 

(b)  Certify  the  rates  of  deduction  from  salary  necessary  to  pay  the 
annuities  authorized  under  the  provisions  of  this  act;  and 

(c)  Certify  the   rates   of   contribution,  expressed   as   a  percentage   of 
salary   of   new   entrants   at  various    ages,   which    shall   be   made   by   the 
Commonwealth  to  the  contingent  reserve  fund. 

8.  Immediately  after  the  passage  of  this  act,  the  actuary  of  the  retire- 
ment board  shall  make  such  investigation  of  the  mortality  service  and 
salary  experience  of  the  employes  of  the  public  schools  as  he  shall  recom- 
mend and  the  retirement  board  shall  authorize,   for  the  purpose  of  de- 
termining upon  the  proper  tables  to  be  prepared  and  submitted  to  the 
retirement  board  for  adoption.     On  the  basis  of  such  investigation  and 
recommendation  the  retirement  board  shall  adopt  such  tables  and  certify 

377 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

such  rates  as  are  required  in  subsections  a,  b,  and  c  of  paragraph  seven, 
immediately  preceding.  On  the  basis  of  such  tables  the  actuary  of  the 
retirement  board  shall,  immediately  after  the  first  day  of  July,  nineteen 
hundred  and  ninteen,  make  a  valuation  of  the  various  funds  created  by 
this  act. 

9.  The   retirement  board   shall  publish   annually  a   report   shownig  the 
condition  of  the  various  funds  created  by  this  act,  and  setting  forth  such 
other  facts,  recommendations,  and  data  as  may  be  of  use  in  the  advance- 
ment  of    knowledge    concerning    employes'    pensions    and    annuities,   and 
said  retirement  board  shall   submit   said  report  to  the  Governor  of  the 
Commonwealth    of    Pennsylvania;    and    shall    file    copies    thereof    in    the 
offices  of  the  State  Department  of  Public  Instruction,  of  the  State  In- 
surance Department,  and  of  each  employer,  for  use  of  the  employes  and 
the  public. 

10.  Each  member  of  the  retirement  board  shall  take  an  oath  of  office 
that  he  or  she  will,  so  far  as  it  devolves  upon  him,  diligently  and  hon- 
estly administer  the  affairs  of  said  retirement  board,  and  that  he  or  she 
will  not  knowingly  violate  or  wilfully  permit  to  be  violated  any  of  the 
provisions  of  law  applicable  to  this  act.     Such  oath  shall  be  subscribed 
by  the  member  making  it,  and  certified  by  the  officer  before  whom  it  is 
taken,  and  shall  be  immediately  filed  in  the  office  of  the  Secretary  of  State. 

11.  The  retirement  board  shall  keep  a  record  of  all  of  its  proceedings, 
which  shall  be  open  to  inspection  by  the  public. 

12.  The   retirement  board   shall   perform    such   other   functions   as   are 
required  for  the  execution  of  the  provisions  of  this  act. 

CORPORATE  POWERS 

Section  5.  For  the  purposes  of  this  act  the  retirement  board  shall  pos- 
sess the  powers  and  privileges  of  a  corporation.  The  Attorney  General 
of  the  Commonwealth  of  Pennsylvania  shall  be  the  legal  adviser  of  said 
retirement  board. 

MANAGEMENT  OF   THE   FUNDS 

Section  6.  The  funds  created  by  this  act  shall  be  managed  as  follows : 

1.  The  members  of  the  retirement  board  shall  be  the  trustees  of  the 
several   funds  created  by  this  act,  and  shall  have  exclusive  control  and 
management  of  the  said  funds  and  full  power  to  invest  the  same;  subject, 
however,    to   all    the    terms,    conditions,    limitations    and    restrictions    im- 
posed by  this   act   upon   the   making  of   investments;    and   subject,   also, 
to  the  terms,  conditions,  limitations,  and  restrictions  imposed  by  law  upon 
savings  banks,   in  the  making  and  disposing  of  their  investments ;  and, 
subject  to  like  terms,  conditions,  limitations,  and  restrictions,  said  trustees 
shall  have  full  power  to  hold,  purchase,  sell,  assign,  transfer,  or  dispose 
of  any  of  the  securities  and  investments  in  which  any  of  the  funds  created 
by  this  act  shall  have  been  invested,  as  well  as  of  the  proceeds  of  said 
investments  and  of  any  moneys  belonging  to  said  funds. 

2.  The   retirement  board   shall   annually   allow   regular   interest   on  the 
mean   amount   for  the  preceding  year  in   each   of  the   funds   created   in 
accordance   with   the   provisions   of   this   act,   with   the   exception   of   the 
expense  fund.     The  amount  so  allowed  shall  be  due  and  payable  to  such 
funds,  and  shall  be  annually  credited  thereto  by  the  retirement  board. 

3.  The  treasurer  of  this  Commonwealth  shall  be  the  custodian  of  the 
several    funds   created  by   this  act. 

4.  All  payments  from  the  funds  created  by  this  act  shall  be  made  by 
the  State  Treasurer  only,  upon  warrants  signed  by  the  chairman  of  the 
retirement  board  and  countersigned  by  the  secretary  of  the   retirement 

378 


APPENDICES 

board ;  and  no  warrant  shall  be  drawn  except  by  order  of  the  retirement 
board,  duly  entered  in  the  record  of  its  proceedings. 

5.  For  the  purpose  of  meeting  disbursements  for  annuities  and  other 
payments  in  excess  of  the  receipts,  there  may  be  kept  as  available  fund, 
not  exceeding  ten  per  centum  of  the  total  amount  in  the  several  funds 
created  by  this  act,  on  deposit  in  any  bank  in  this  Commonwealth  organ- 
ized under  the  laws  thereof  or  under  the  laws  of  the  United  States,  or 
with    any    trust    company    incorporated    by    any    law    of    this    Common- 
wealth,   provided    said    bank    or    trust    company    shall    furnish    adequate 
security  for  said  funds ;  and  provided  that  the  sum  so  deposited  in  any 
one  bank  or  trust  company  shall  not  exceed  twenty-five  per  centum  of  the 
paid-up  capital  and  surplus  of  said  bank  or  trust  company. 

6.  Except  as  herein  provided,  no  trustee  or  any  person  connected  with 
the  retirement  board   shall  have  any  interest,  direct  or  indirect,  in  the 
gains  or  profits  of  any  investment  made  by  the  retirement  board ;  nor, 
as  such,  directly  or  indirectly,  receive  any  pay  or  emoluments  for  his  or 
her  services.     And  no  trustee  or  person  connected  with  said  retirement 
board,   directly  or  indirectly,   for  himself  or  herself,  or  as  an  agent  or 
partner  of  others,  shall  borrow  any  of  its  funds  or  deposits,  or  in  any 
manner  use  the  same,  except  to  make  such  current  and  necessary  pay- 
ments as  are  authorized  by  the  board  of  trustees ;  nor  shall  any  trustee 
or  person  connected  with  said  retirement  board  become  an  endorser  or 
surety,  or  become  in  any  manner  an  obligor,   for  moneys  loaned  by  or 
borrowed  of  said  retirement  board. 

DUTIES  OF  THE  EMPLOYER 

Section  7.  Each  employer  shall,  before  employing  any  person  to  whom 
this  act  may  apply,  notify  such  person  of  his  or  her  duties  and  obligations 
under  this  act,  as  a  condition  of  his  or  her  employment. 

2.  During  September  of  each  year  each  employer  shall  certify  to  the 
retirement  board  the  name  of  all  employees  to   whom  this  act  applies. 

3.  Each  employer  shall,  on  the  first  day  of  each  calendar  month,  notify 
the    retirement   board    of    the   employment    of    new    employes,    removals, 
withdrawals,  and  changes  in  salary  of  employes,  that  shall  have  occurred 
during  the  month  preceding. 

4.  Under   the   direction   of   the   retirement  board,   each   employer   shall 
furnish    such   other   information   as   the  board   may   require   in   the   dis- 
charge of  its  duties. 

5.  Each  employer  shall  cause  to  be  deducted  on  each  and  every  payroll 
of  a  contributor,   for  each  and  every  payroll  period  subsequent  to  June 
thirtieth,  nineteen  hundred  nineteen,  such  per  centum  of  the  total  amount 
of  salary  earnable  by  the  contributor  in  such  payroll  period  as  shall  be 
certified  to  said  employer  by  the  retirement  board  as  proper,  in  accordance 
with  the  provisions  of  this  act.     No  deductions  shall  be  made  from  that 
part  of  the  salary  earnable  by  any  contributor  which  is  at  a  rate  in  excess 
of  two  thousand  dollars  per  annum.     In  determining  the  amount  earnable 
by  a  contributor  in  a  payroll  period,  the  retirement  board  may  consider  the 
rate  of  salary  payable  to  such  contributor  on  the  first  day  of  each  regular 
payroll  period  as  continuing  throughout  such  payroll  period,  and  it  may 
omit  salary  deductions  for  any  period  less  than  a  full  payroll  period  in  cases 
where  the  employe  was  not  a  contributor  on  the  first  day  of  the  regular 
payroll  period ;   and,  to   facilitate  the  making  of  the  deductions,  it  may 
modify  the  deductions   required   of  any  contributor  by  such   amount  as 
shall  not  exceed  one-tenth  of  one  per  centum  of  the  salary  upon  the  basis 
of  which  the  deduction  is  to  be  made.     The  deductions  provided  herein 
shall  be  made,  notwithstanding  that  minimum  salaries  provided  for  by  the 

379 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

laws,  ordinances,  resolutions,  or  other  acts  of  the  Commonwealth,  or  of 
any  other  employer,  shall  be  reduced  thereby.  Each  employer  shall  certify 
to  the  treasurer  of  said  employer,  on  each  and  every  payroll,  a  statement 
as  voucher  for  the  amounts  so  deducted,  and  shall  send  a  duplicate  of 
such  statement  to  the  secretary  of  the  retirement  board. 

6.  The  treasurer  of  each  employer,  on  receipt  from  the  employer  of  the 
voucher  for  deductions  from  the  salaries  of  employes,  provided  in  para- 
graph five  of  this  section,  shall  transmit  monthly,  or  at  such  times  as  the 
retirement  board  shall  designate,  the  amounts  specified  in  such  voucher 
to  the  secretary  of  the  retirement  board.    The  secretary  of  the  retirement 
board,  after  making  a  record  of  all  such  receipts,  shall  pay  them  to  the 
treasurer  of  the  Commonwealth,  for  use  according  to  the  provisions  of 
this  act. 

7.  Each  employer  shall  keep  such  records  as  the  retirement  board  may 
require. 

FUNDS 

Section  8.  The  funds  hereby  created  are, — the  expense  fund,  the  con- 
tingent reserve  fund,  State  annuity  reserve  fund,  State  annuity  reserve 
fund  number  two,  the  employes'  annuity  savings  fund,  and  the  employes' 
annuity  reserve  fund. 

2.  The  expense  fund  shall  consist  of  such  amounts  as  shall  be  paid  by 
the  Commonwealth,  on  the  basis  of  estimates  submitted  by  the  retire- 
ment board,  to  defray  the  expenses  of  the  administration  of  this  act,  ex- 
clusive of  the  payment  of  retirement  allowances  and  of  the  other  benefits 
provided  for  in  this  act. 

3.  In  the  month  of  July,  1920,  for  a  period  covering  the  twelve  months 
next  preceding,  and  semiannually  thereafter,  covering  the  six  months  next 
preceding,  the  Commonwealth  of  Pennsylvania  shall  pay  into  a  fund  to  be 
known  as  the  contingent  reserve  fund,  on  account  of  each  new  entrant 
who  was  a  contributor  for  one  or  more  months  of  such  respective  periods, 
such  amount  as  shall  be  certified  by  the  retirement  board  as  necessary  to 
provide  by  such  method  of  payment,  during  the  prospective  active  service 
of  such  new  entrant,  the  State  annuity  reserve  required  at  the  time  of  re- 
tirement for  the  disability  or  superannuation  State  annuity  allowable  by 
the  said  Commonwealth,  under  the  provisions  of  this  act.     The  amount 
so  certified  by  the  retirement  board  shall  be  computed  to  bear  a  ratio 
to  the  salary  earnable  by  such  new  entrant  during  the  period  for  which 
the  amount  is  certified,   which  shall   remain  constant  during  his  or  her 
entire  period  of  prospective  active  service,  and  shall  be  based  on  such 
mortality  and  other  tables  as  shall  be  adopted  by  the  retirement  board, 
and  on  regular  interest. 

4.  Upon  the  retirement  of  a  new  entrant  an  amount  equal  to  his  or  her 
State  annuity  reserve  shall  be  transferred   from  the  contingent  reserve 
fund  into  a  fund  to  be  known  as  State  annuity  reserve  fund.    His  or  her 
State  annuity  shall  be  paid  from  said  State  annuity  reserve  fund.     Should 
said  new  entrant  be  subsequently  restored  to  active  service,  his  or  her 
State  annuity  reserve  shall  thereupon  be  transferred  from  State  annuity 
reserve  fund  to  the  contingent  reserve  fund.     Should  the  State  annuity  of 
any  such  new  entrant  be  otherwise  reduced  or  discontinued,  in  accordance 
with  the  provisions  of  this  act,  his  or  her  State  annuity  reserve,  or  such 
proportionate  part  of  his  or  her  State  annuity  reserve  as  corresponds  to 
the  amount  of  the  reduction  in  his  or  her  State  annuity,  shall  be  trans- 
ferred from  State  annuity  reserve  fund  to  the  contingent  reserve  fund. 

5.  Beginning    with    the    month    of    July,    nineteen    hundred    nineteen, 
and  continuing  until  the  accumulated  reserve  equals  the  present  value,  as 
computed  by  the  actuary  of  the  retirement  board  and  approved  by  the 

380 


APPENDICES 

retirement  board,  of  all  State  annuity  payments  thereafter  payable  by  the 
Commonwealth  on  account  of  present  employes,  then  retired  or  to  be 
retired  on  State  annuities  as  provided  in  this  act,  the  said  Commonwealth 
shall  pay  semi-annually  into  a  fund,  to  be  known  as-  State  annuity  reserve 
fund  number  two,  an  amount  equal  to  two  and  eight-tenths  (28)  per 
centum  of  the  total  compensation  paid  to  all  contributors  for  service 
during  the  preceding  school  year,  and  in  every  case  an  amount  at  least 
three  per  centum  greater  than  the  second  preceding  semi-annual  payment: 
Provided,  That  in  every  case  the  amount  shall  be  sufficient,  when  combined 
with  that  in  the  fund,  to  provide  the  pensions  payable  by  the  Common- 
wealth during  the  half-year  then  current  to  present  employes,  then  retired 
or  to  be  retired  as-  provided  in  this  act.  Upon  the  retirement  of  a  present 
employe  his  or  her  State  annuity  shall  be  paid  from  State  annuity  reserve 
fund  number  two. 

6.  The  employes'  annuity  savings  fund  shall  consist  of  the  accumulated 
deductions  from  the  salaries  of  contributors,  made  under  such  rules  and 
regulations  as  the  retirement  board  shall  prescribe,  as  follows: 

From  the  salary  of  each  employe  who  is  a  contributor  there  shall  be 
deducted  such  per  centum  of  his  or  her  earnable  salary,  not  exceeding 
two  thousand  dollars  per  annum,  as  shall  be  computed  to  be  sufficient,  with 
regular  interest,  to  procure  for  him  or  her,  on  superannuation  retirement 
at  age  sixty-two,  an  employe's  annuity  equal  to  one  one-hundred-sixtieth 
(1-160)  of  his  or  her  final  salary  for  each  year  of  service  after  the  thirtieth 
day  of  June,  nineteen  hundred  nineteen,  except  that,  if  the  deduction 
so  computed  shall  exceed  five  per  centum  of  his  or  her  earnable  salary, 
and  the  employe  shall  so  elect,  there  shall  be  deducted  five  per  centum 
of  his  or  her  earnable  salary :  And  further  provided,  That  a  beneficiary 
restored  to  school  service  shall  not  be  required  to  contribute  at  a  per 
centum  rate  of  his  or  her  earnable  salary  which  is  greater  than  the  per 
centum  thereof  which  he  or  she  was  required  to  contribute  prior  to  his  or 
her  retirement.  The  rate  per  centum  of  said  deduction  from  salary  shall 
be  based  on  such  mortality  and  other  tables  as  the  retirement  board  shall 
adopt,  together  with  regular  interest,  and  shall  be  computed  to  remain 
constant  during  the  prospective  school  service  of  the  contributor. 

7.  Upon  the  retirement  of  a  contributor  his  or  her  accumulated  deduc- 
tions shall  be  transferred  from  the  employes'  annuity  savings  fund  to  a 
fund  to  be  known  as  the  employes'  annuity  reserve  fund.    His  or  her  em- 
ployes' annuity  shall  be  paid  out  of  said  employes'  annuity  reserve  fund. 
Should  said  contributor  be  subsequently  restored  to  active  service,  his  or 
her  employes'  annuity  reserve  shall  thereupon  be  transferred  from  the  em- 
ployes' reserve  fund  to  the  employes'  annuity  savings  fund. 

8.  No   contributor   shall  be   required  to   continue   to  contribute  to   the 
employes'  annuity  savings  fund  after  he  or  she  shall  have  become  eligible 
for  superannuation  retirement;  all  contributions  made  thereafetr  to  said 
fund  shall  be  voluntary. 

Section  9.  The  Commonwealth  of  Pennsylvania  shall  be  reimbursed  to 
the  extent  of  one-half  of  the  amount  paid  by  the  Commonwealth  into  the 
contingent  reserve  fund  and  the  State  annuity  reserve  fund  number  two 
on  account  of  employes  of  each  other  employer,  by  payments  into  its 
treasury  made  directly  by  such  employer,  or  indirectly  from  moneys  other- 
wise belonging  to  such  employer.  To  facilitate  the  payment  of  amounts 
due  from  the  treasurer  of  any  employer  to  the  treasurer  of  the  Common- 
wealth, on  account  of  the  retirement  system,  and  to  permit  the  exchange 
of  credits  between  the  treasurer  of  the  Commonwealth  and  the  treasurer 
of  any  employer,  the  State  Superintendent  of  Public  Instruction  and  the 
State  Treasurer  are  hereby  authorized  and  empowered  to  cause  to  be 
deducted,  and  paid  into  or  retained  in  the  State  Treasury,  from  the 

381 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

amount  of  any  moneys  due  to  any  employer  on  account  of  any  appropria- 
tion for  schools  or  other  purposes,  the  amount  due  to  the  State  Treasury 
from  such  employer,  in  accordance  with  the  provisions  of  this  act.  Cor- 
responding amounts,  which  would  be  otherwise  transferred  to  the  treasury 
of  the  Commonwealth  from  the  treasurer  of  such  employer,  may  be  cred- 
ited to  the  accounts  of  the  employer  to  which  the  moneys  withheld  by  the 
Commonwealth  were  payable. 

STATE    GUARANTY 

Section  10.  Regular  interest  charges  payable,  the  creation  and  main- 
tenance of  reserves  in  the  contingent  reserve  fund,  and  the  maintenance 
of  employes'  annuity  reserves  and  State  annuity  reserves  as  provided  for 
in  this  act,  and  the  payment  of  all  retirement  allowances  and  other  bene- 
fits granted  by  the  retirement  board  under  the  provisions  of  this  act, 
are  hereby  made  obligations  of  the  Commonwealth  of  Pennsylvania.  All 
income,  interest,  and  dividends  derived  from  deposits  and  investments 
authorized  by  this  act  shall  be  used  for  the  payment  of  the  said  obliga- 
tions of  the  Commonwealth.  The  retirement  board  shall  prepare,  and 
submit  to  the  Legislature,  on  or  before  the  thirty-first  day  of  January 
in  each  odd-numbered  year,  an  itemized  estimate  of  the  amounts  neces- 
sary to  be  appropriated  by  the  Commonwealth  to  the  various  funds  to 
complete  the  payment  of  the  said  obligations  of  said  Commonwealth  accru- 
ing during  the  biennium  beginning  July  first  of  the  same  year ;  and  it  shall 
be  the  duty  of  said  Legislature  to  make  an  appropriation  sufficient  to 
provide  for  such  obligations  of  the  Commonwealth ;  and  the  amounts  so 
appropriated  shall  be  included  in  the  general  appropriation  bill,  and  shall 
be  paid  by  the  Treasurer  of  the  Commonwealth  into  the  various  funds 
created  by  this  act.  For  the  biennium  beginning  July  first,  nineteen  hun- 
dred seventeen,  there  is  hereby  appropriated  to  the  expense  fund 
created  by  section  eight,  paragraph  two  of  this  act,  such  sum,  not  to 
exceed  twenty  thousand  dollars,  as  shall  be  certified  to  the  Treasurer  of 
the  Commonwealth  by  the  retirement  board  as  necessary  to  meet  the  ex- 
penses of  establishing  the  retirement  system  constituted  by  the  provisions 
of  this  act.  For  said  biennium  there  is  hereby  appropriated,  and  the 
Treasurer  of  the  Commonwealth  of  Pennsylvania  is  hereby  authorized 
and  directed  to  pay  into  State  annuity  reserve  fund  number  two,  the 
amounts  which  shall  become  due  in  such  period  from  the  Commonwealth 
of  Pennsylvania  to  such  fund  under  the  provisions  of  section  eight,  para- 
graph five  of  this  act. 

SERVICE   ALLOWANCE 

Section  n.  In  computing  the  length  of  service  of  a  contributor  for 
retirement  purposes,  under  the  provisions  of  this  act,  full  credit  shall 
be  given  to  each  contributor  by  the  retirement  board  for  each  school 
year  of  service  as  an  employee,  as  defined  in  section  one,  paragraph  seven, 
of  the  act.  Under  such  rules  and  regulations  as  the  retirement  board 
shall  adopt,  each  employe  shall  file  with  the  retirement  board  a  detailed 
statement  of  all  such  service  rendered  by  him  or  her.  As  soon  as  prac- 
ticable thereafter  the  retirement  board  shall  verify  such  statement  as 
to  prior  service,  and  shall  issue  to  each  employee  a  certificate  certifying 
to  the  aggregate  length  of  his  or  her  prior  service.  Such  certificate 
shall  be  final  and  conclusive  as  to  his  or  her  prior  service,  unless  there- 
after modified:  (a)  by  the  retirement  board,  upon  application  by  employe; 
or  (b)  by  the  State  Superintendent  of  Public  Instruction,  upon  applica- 
tion by  the  employee  or  by  the  retirement  board ;  provided  such  appli- 
cation for  modification  be  made  to  said  State  Superintendent  of  Public 

382 


APPENDICES 

Instruction  within  one  year  after  the  issuance  of  a  certificate  or  a 
modified  certificate  by  the  retirement  board.  A  certificate  for  prior 
service  issue  to  a  present  employe  shall  certify  the  total  number  of 
completed  years  .of  prior  service  allowance  for  said  present  employe  to 
and  including  the  thirtieth  day  of  June,  nineteen  hundred  nineteen.  The 
time  during  which  an  employe  is  absent  without  pay  shall  not  be  counted 
in  computing  the  prior  service,  the  total  service  or  the  average  salary 
of  a  contributor,  unless  allowed  by  the  employer  by  whom  said  con- 
tributor was  employed  at  the  time  said  leave  of  absence  was  granted, 
and,  further,  unless  said  allowance  is  approved  by  the  retirement  board. 

WITHDRAWAL 

Section  12.  Should  a  contributor,  by  resignation  or  dismissal,  or  in 
any  other  way  than  by  death  or  retirement,  separate  from  the  school 
service,  he  or  she  shall  be  paid  on  demand:  (a)  the  full  amount  of  the 
accumulated  deductions  standing  to  the  credit  of  his  or  her  individual 
account  in  the  annuity  savings  fund,  or,  in  lieu  thereof,  should  he  or  she 
so  elect,  (b)  an  annuity  or  a  deferred  annuity,  which  shall  be  the  actuarial 
equivalent  of  said  accumulated  deductions.  His  or  her  membership  in 
the  retirement  association  shall  thereupon  cease. 

2.  Should   an   employe   so   separated    from   the   school   service,   return 
within  three  years,  and  restore  to  the  annuity  savings  fund  his  or  her 
accumulated  deductions,  as  they  were  at  the  time  of  his  or  her  separation, 
the  annuity  rights  forfeited  by  him  or  her  at  that  time  shall  be  restored. 

3.  Should  a  contributor  die  before  retirement,  his  or  her  accumulated 
deductions  shall  be  paid  to  his  or  her  estate,  or  to  such  person  as  he  or  she 
shall  have  nominated  by  written  designation  duly  executed  and  filed  with 
the  retirement  board. 

DISABILITY  RETIREMENT 

Section  13.  Retirement  upon  disability  shall  be  made  and  discontinued 
as  follows : — 

1.  Upon   the   application   of  a   contributor   who   is   an  employe,  or   of 
one  acting  in  his  or  her  behalf,  or  upon  the  application  of  the  employer 
of  a  contributor,  the  retirement  board  shall  retire  said  contributor  on  a 
disability  allowance  if  he  or  she   is  under  the  age  of   sixty-two  years, 
and  on  a  superannuation  allowance  if  he  or  she  has  attained  or  passed 
such  age;  provided  the  physician  or  physicians  designated  by  said  board, 
after  a  medical  examination   of   said  contributor   made  at  the  place  of 
residence  of  said  contributor,  or  at  a  place  mutually  agreed  upon,  shall 
certify   to    the   retirement   board   that   said    contributor    is    physically   or 
mentally  incapacitated  for  the  performance  of  duty,  and  that  said  con- 
tributor ought  to  be  retired ;  and  provided  further,  that  said  contributor 
has  had  ten  or  more  school  years  of  school  service. 

2.  Once    each   year    the    retirement    board    may    require    any    disability 
annuitant,  while  still  under  the  age  of  sixty-two  years,  to  undergo  medical 
examination  by  a  physician  or   physicians  designated  by  the   retirement 
board,   said  examination  to  be  made  at  the  place  of   residence  of  said 
beneficiary,  or  other  place  mutually  agreed  upon.     Should  such  physician 
or  physicians  thereupon  report  and  certify  to  the  retirement  board  that 
such  disability  beneficiary  is  no  longer  physically  or  mentlaly  incapacitated, 
for  the  performance  of  duty,  or  that  such  disability  beneficiary  is  able 
to    engage    in    a    gainful    occupation,    and    should    the    retirement    board 
concur  in  such  report,  then  the  amount  of  the  State  annuity  shall  be  dis- 
continued, or  reduced  to  an  amount  that  shall  be  not  in  excess  of  the 
amount  by  which  the  amount  of  the  last  year's  salary  of  the  beneficiary, 

383 


as  an  employe,  exceeds  the  present  earning  capacity  of  the  contributor. 

3.  Should   any  disability  annuitant,   while   under  the   age  of   sixty-two 
years,  refuse  to  submit  to  at  least  one  medical  examination  in  any  year 
by  a  physician  or  physicians  designated  by  the  retirement  board,  his  or 
her   State   annuity   shall   be   discontinued   until   the   withdrawal   of   such 
refusal,  and,  should  such  refusal  continue   for  one  year,  all  his  or  her 
rights  in  and  to  the  State  annuity  constituted  by  this  act  shall  be  forfeited. 

4.  Upon  application  of  any  beneficiary  under  the  age  of  sixty-two  years, 
drawing  a   retirement  allowance  under  the  provisions   of  this   act,   said 
beneficiary  may  be  restored  to  active  service  by  the  employer  by  whom 
he  or  she  was  employed  at  the  time  of  his  or  her  retirement.    Upon  the 
restoration  of  a  beneficiary  to  active  service,  his  or  her  retirement  allow- 
ance shall  cease. 

ALLOWANCE  ON   DISABILITY  RETIREMENT 

5.  On  retirement  for  disability,  a  contributor  who  is  an  employe  shall 
receive  a  retirement  allowance  which  shall  consist  of — 

(a)  An  employe's  annuity,  which  shall  be  the  actuarial  equivalent  of 
his  or  her  accumulated  deductions;  and 

(b)  A  State  annuity  which,  together  with  the  employe's  annuity,  shall 
be  sufficient  to  produce  a  retirement  allowance  of  one-ninetieth  of  his  or 
her  final  salary  multiplied  by  the  number  of  his  or  her  years  of  service ; 
but,  in  any  case  not  less  than  thirty  per  centum  of  said  final  salary,  ex- 
cept that  in  case  thirty  per  centum  of  said  final  salary  shall  exceed  eight- 
ninths  of  the  rate  of  retirement  allowance  to  which  the  employe  might 
have  been  entitled  had  retirement  been  deferred  until  age  sixty-two,  then 
the  State  annuity  granted  shall  be  such  as  to  make  the  rate  of  the  total 
retirement  allowance  equal  to   eight-ninths  of  the  rate  of  allowance  to 
which  the  employe  might  have  been  entitled  had  retirement  been  deferred 
until  age  sixty-two. 

SUPERANNUATION    RETIREMENT 

Section  14.  Retirement  for  superannuation  shall  be  as  follows : 

1.  Any  contributor  who  is  an  employe  sixty-two  years  of  age  or  older 
may   retire    for   superannuation   by   filing   with   the   retirement   board   a 
written  statement,  duly  attested,  setting  forth  at  what  time,  subsequent 
to   the   execution   of   said   application,   he   or   she   desires   to   be   retired. 
Said  application  shall  retire  said  contributor  at  the  time  so  specified,  or, 
in  the  discretion  of  the  retirement  board,  at  the  end  of  the  school  term 
in  which  the  time  so  specified  occurs. 

2.  Each  and  every  contributor  who  has  attained  or  shall  attain  the  age 
of  seventy  years  shall  be  retired  by  the  retirement  board,  for  superannua- 
tion, forthwith,  or  at  the  end  of  the  school  term  in  which  said  age  of 
seventy  years  is  attained. 

ALLOWANCE    ON    SUPERANNUATION    RETIREMENT 

3.  On  retirement  for  superannuation,  a  contributor  who  is  an  employe 
shall  receive  a  retirement  allowance  which  shall  consist  of — 

(a)  A  teacher's  annuity,  which  shall  be  the  actuarial  equivalent  of  his 
or  her  accumulated  deductions ;  and 

(b)  A  State  annuity  of  one  one-hundred-sixtieth  (1-160)  of  his  or  her 
final  salary  for  each  year  of  service  prior  to  the  age  of  sixty-two  years ; 
and 

(c)  In  addition  thereto,  if  a  present  employe,  a  further  State  annuity 
of  one  one-hundred-sixtieth   (1-160)   of  his  or  her  final  salary  for  each 
year  of  prior  service,  as  certified  to  said  present  employe  in  the  certificate 


384 


APPENDICES 

issued  to  him  or  her  by  the  retirement  board  under  the  provisions  of 
section  ten  of  this  act;  but  in  no  event  shall  the  total  State  annuity  exceed 
fifty  per  centum  of  his  or  her  final  salary. 

OPTIONS 

Section  15.  At  the  time  of  his  or  her  retirement  any  contributor  may 
elect  to  receive  his  or  her  benefits  in  a  retirement  allowance,  payable 
throughout  life;  or  he  or  she  may,  on  retirement,  elect  to  receive  the 
actuarial  equivalent  at  that  time  of  his  employe's  annuity,  his  or  her  State 
annuity,  or  his  retirement  allowance,  in  a  lessor  employe's  annuity,  or  a 
lesser  State  annuity,  or  a  lesser  retirement  allowance,  payable  throughout 
life ;  with  the  provisions  that : — 

Option  i. — If  he  or  she  die  before  he  has  received  in  payments  the 
present  value  of  his  or  her  employe's  annuity,  his  State  annuity,  or 
his  or  her  retirement  allowance  as  it  was  at  the  time  of  his  retirement, 
the  balance  shall  be  paid  to  his  or  her  legal  representatives,  or  to  such 
person  having  an  insurable  interest  in  his  or  her  life,  as  he  or  she  shall 
nominate  by  written  designation,  duly  acknowledged,  and  filed  with  the 
retirement  board,  at  the  time  of  his  or  her  retirement. 

Option  2. — Upon  his  Ir  her  death,  his  employe's  annuity,  his  State  an- 
nuity, or  his  or  her  retirement  allowance  shall  be  continued  throughout  the 
life  of  and  paid  to  such  person,  having  an  insurable  interest  in  his  or  her 
life,  as  he  or  she  shall  nominate  by  written  designation,  duly  acknowl- 
edged, and  filed  with  the  retirement  board,  at  the  time  of  his  or  her 
retirement. 

Option  3. — Upon  his  or  her  death,  one-half  of  his  or  her  employe's 
annuity,  his  or  her  State  annuity,  or  his  or  her  retirement  allowance  shall 
be  continued  throughput  the  life  of  and  paid  to  such  person,  having  an 
insurable  interest  in  his  or  her  life,  as  he  or  she  shall  nominate  by  written 
designation,  duly  acknowledged,  and  filed  with  the  retirement  board,  at 
the  time  of  liis  or  her  retirement. 

Option  4. — Some  other  benefit  or  benefits  shall  be  paid  to  either  the 
contributor  or  such  other  person  or  persons  as  he  or  she  shall  nominate; 
provided  such  other  benefit  or  benefits  shall,  together  with  such  lesser 
employe's  annuity,  or  lesser  State  annuity,  or  lesser  retirement  allowance, 
be  certified  by  the  actuary  of  the  retirement  board  to  be  of  equivalent 
actuarial  value,  and  shall  be  approved  by  the  retirement  board. 

MONTHLY   PAYMENTS 

Section  16.  An  employe's  annuity,  a  State  annuity,  or  a  retirement  al- 
lowance, granted  under  the  provisions  of  this  act,  shall  be  paid  in  equal 
monthly  instalments,  and  shall  not  be  increased,  decreased,  revoked,  or 
repealed  except  as  otherwise  provided  in  this  act. 

STATE  SUPERVISION 

Section  17.  The  various  funds  created  by  this  act  shall  be  subject  to  the 
supervision  of  the  State  Department  of  Insurance. 

EXEMPTIONS   FROM   EXECUTION 

Section  18.  The  right  of  a  person  to  an  employe's  annuity,  a  State  an- 
nuity, or  retirement  allowance,  to  the  return  of  contributions,  any  benefit 
or  right  accrued  or  accruing  to  any  person  under  the  provisions  of  this 
act,  and  the  moneys  in  the  various  funds  created  under  this  act,  are 
hereby  exempt  from  any  State  or  municipal  tax,  and  exempt  from  levy 
and  sale,  garnishment,  attachment,  or  any  other  process  whatsoever,  and 


385 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

shall  be  unassignable  except  as  in  this  act  specifically  otherwise  provided. 

Section  19.  Any  person  who  shall  knowingly  make  any  false  statement, 
or  shall  falsify  or  permit  to  be  falsified  any  record  or  records  of  this 
retirement  system,  in  any  attempt  to  defraud  such  system  as  a  result  of 
such  act,  shall  be  guilty  of  a  misdemeanor,  and  shall  be  punishable  for 
such  under  the  laws  of  the  Commonwealth  of  Pennsylvania.  Should  any 
such  change  in  records  or  any  mistake  in  records  result  in  any  employe 
or  beneficiary  receiving  from,  the  retirement  system  more  or  less  than 
he  or  she  would  have  been  entitled  to  receive  had  the  records  been  cor- 
rect, then,  on  the  discovery  of  any  such  error,  the  retirement  board,  shall 
correct  such  error,  and,  so  far  as  practicable,  shall  adjust  the  payments 
which  may  be  made  for  and  to  such  person  in  such  a  manner  that  the 
actuarial  equivalent  of  the  benefit  to  which  he  or  she  was  correctly  entitled 
shall  be  paid. 

Section  20.  This  act  shall  take  effect  immediately. 

Approved,  the  i8th  day  of  July,  A.  D.  1917. 

(d)   Connecticut 

Laws  of  1917,  Chapter  411 — An  Act  to  Establish  a  Retirement  System 
for   Public   School   Teachers 

CONSTRUCTION 

Section  i.  The  following  words  and  phrases  as  used  in  this  act,  unless 
a  different  meaning  is  plainly  required  by  the  context,  shall  have  the 
following  meanings : 

(1)  "Retirement  system"  shall  mean  the  arrangement  provided  in  this 
act  for  payment  of  annuities  and  pensions  to  teachers-. 

(2)  "Annuities"  shall  mean  payments  for  life  derived  from  contribu- 
tions from  teachers. 

(3)  "Pensions"  shall  mean  payments  for  life  derived  from  contribu- 
tions from  the  State. 

(4)  "Teacher"  shall  mean  any  teacher,  principal,  supervisor,  or  superin- 
tendent engaged  in  the  service  of  the  public  schools. 

(5)  "Public  school"  shall  mean  any  day  school  conducted  within  this 
State  under  the  order  and  superintendence  of  a  duly  elected  school  com- 
mittee or  board  of  education,  including  the  state  board  of  education. 

(6)  "Regular  interest"  shall  mean  interest,  at  the  rate  determined  by 
the  retirement  board,   and   shall  be   substantially  that   which   is  actually 
earned  by  the  funds  of  the  retirement  association,  compounded  annually 
on  the  last  day  of  December  of  each  year. 

(7)  "Retirement  board"  shall  mean  the  teachers'  retirement  board,  as 
provided  in  section  four  of  this  act. 

(8)  "Retirement  association"  shall  mean  the  teachers'  retirement  asso- 
ciation, as  provided  in  section  three  of  this  act. 

(9)  "Expense  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  one  in  section  five  of  this  act. 

(10)  "Annuity  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  two  in  section  five  of  this  act. 

(n)  "Pension  fund"  shall  mean  the  fund  provided  for  in  paragraph 
numbered  three  in  section  five  of  this  act. 

(12)  "School  year"  shall  mean  the  twelve  months  from  the  first  day 
of  July  of  any  year  to  the  thirtieth  day  of  June  next  succeeding. 

(13)  "Assessments"   shall   mean   the  annual   payments  to  the  annuity 
fund  by  members  of  the  association. 

(14)  The  masculine  pronoun  shall  be  held  to  refer  to  either  sex  or 
both  sexes  as  the  context  may  require. 

386 


APPENDICES 

ESTABLISHMENT   OF   A   TEACHERS'    RETIREMENT   SYSTEM 

Section  2.    A  teachers  retirement  system  shall  be  established  on  the  first 
day  of  July,  nineteen  hundred  and  seventeen. 

TEACHERS'  RETIREMENT  ASSOCIATION 

Section  3.  A  teachers'  retirement  association  shall  be  organized  among 
the  teachers  in  the  public  schools  as  follows : 

(1)  All  teachers  who  enter  the  service  of  the  public  schools  for  the 
first  time  on  or  after  July  first,  nineteen  hundred  and  seventeen,  shall 
become  thereby  members  of  the  association. 

(2)  All   teachers,   who   shall  have   entered   the   service   of   the   public 
schools   before   June   thirtieth,   nineteen  hundred   and   seventeen,   may  at 
any  time  between  July  first,  nineteen  hundred  and  seventeen,  and   Sep- 
tember   thirtieth,    nineteen    hundred   and    seventeen,    upon    application    in 
writing  to  the  secretary  of  the  state  board  of  education,  become  members 
of  the  retirement  association.     Any  such  teacher  failing  to  do  so  may 
thereafter   become    a   member   of    the    retirement   association   by    paying 
an  amount  equal  to  the  total  assessments,  together  with  regular  interest 
thereon,  that  he  would  have  paid  if  he  had  joined  the  retirement  associa- 
tion on  September  thirtieth,  nineteen  hundred  and  seventeen. 

STATE  TEACHERS'  RETIREMENT  BOARD 

Section  4.  (i)  The  management  of  the  retirement  system  is  hereby 
vested  in  the  teachers'  retirement  board,  which  shall  consist  of  five 
members. 

(2)  The  insurance  commissioner  for  the  state,  the  bank  commissioner 
for  the  state  and  the  secretary  of  the  state  board  of  education  shall  be 
members  of  this  board. 

(3)  As  soon  as  possible  after  the  passage  of  this  act  and  not  later  than 
July  first,  nineteen  hundred  and  seventeen,  the  governor  shall  appoint  as 
members  of  the  retirement  board  two  persons   from  the  teaching  force 
of  the  state,  one  to  serve  until  July  first,  nineteen  hundred  and  nineteen, 
and  one  to  serve  until  July  first,  nineteen  hundred  and  twenty-one. 

(4)  On  or  before  July  first,  nineteen  hundred  and  nineteen  and  bi- 
ennially thereafter  the  members  of  the  retirement  association  shall  elect 
from  among  their  number  in  a  manner  to  be  prescribed  by  the  retirement 
board   one  person  to   serve   upon   the   retirement   board    for   a   term   of 
four  years. 

(5)  If   a   vacancy   should   occur   in   the   positions    filled   by   members 
of  the  retirement  association,  the  retirement  board  shall  elect  a  member 
of  the  retirement  association  to  fill  the  unexpired  term. 

(6)  The  members  of  the  retirement  board  shall  serve  without  com- 
pensation, but  they  shall  be   reimbursed  from  the  expense  fund  of  the 
retirement  association   for  any  expenditures  or  loss  of  salary  or  wages 
which  they  may  incur  through   serving  on   this  board.     All   claims    for 
reimbursement  on  this  account  shall  be  subject  to  the  approval  of  the 
governor. 

(7)  The  retirement  board  shall  have  power  to  make  by-laws  and  regu- 
lations not  inconsistent  with  the  provisions  of  this  act ;  and  to  employ  a 
secretary,  who  shall  give  a  surety  bond  in  such  amount  as  the  board  shall 
approve,   and   clerical   and   other   assistance   as    may   be   necessary.     The 
salaries  shall  be  paid  by  the  board  with  the  approval  of  the  governor. 

(8)  The  retirement  board  shall  provide  for  the  payment  of  retirement 
allowances  and  such  other  expenditures  as  are  required  by  the  provisions 
of  fr.is  act. 

387 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

(9)  The  retirement  board  shall  adopt  for  the  retirement  system  one  or 
more  mortality  tables,  and  may  from  time  to  time  modify  such  tables  or 
prescribe   other  tables   to   represent  more  accurately  the   expense  of  the 
retirement  system. 

(10)  The  retirement  board  shall  perform  such  other  functions  as  are 
required  for  the  execution  of  the  provisions  of  this  act. 

CREATION  OF  FUNDS 

Section  5.  The  funds  of  the  retirement  system  shall  consist  of  an  ex- 
pense fund,  an  annuity  fund,  and  a  pension  fund. 

(1)  The  expense  fund  shall  consist  of  such  amounts  as  shall  be  appro- 
priated by  the  general  assembly  from  year  to  year  on  estimates  submitted 
by  the  retirement  board  to  defray  the  expenses  of  the  administration  of 
this  act,  exclusive  of  the  payment  of  retirement  allowances. 

(2)  The  annuity  fund  shall  consist  of  assessments  paid  by  members 
of  the  retirement  association,  and  interest  derived   from  investments  of 
the  annuity  fund.     Each  member  of  the  retirement  association  shall  pay 
into  the  annuity  fund  in  the  manner  provided  in  section  nine,  paragraph 
five,  of  this  act  five  per  cent  of  his  annual  salary:  provided,  however,  that 
when  the  total  sum  of  assessments  on  the  salary  of  any  member  at  the 
rate  of  five  per  cent  would  amount  to  more  than  one  hundred  dollars  or 
less  than  twenty-five  dollars  for  any  school  year  such  member  shall  in 
lieu  of  assessments  at  the  regular  rate  be  assessed  one  hundred  dollars 
a  year  or  twenty-five  dollars  a  year,  as  the  case  may  be,  payable  in  equal 
instalments  to  be  assessed  for  the  number  of  months  during  which  the 
schools  of  the  community  in  which  such  member  is  employed  are  com- 
monly in  session.     Any  member  of  the  retirement  association  who  shall 
for  thirty  years  have  paid   regular  assessments  to  the  annuity   fund  as 
herein   provided,    shall   be   exempt    from    further   assessments ;   but   such 
member  may  thereafter  if  he  so  elects,  continue  to  pay  his  assessments  to 
the  fund.    No  member  so  electing  shall  pay  further  assessments  after  the 
total  sum  of  assessments  paid  by  him  shall  at  any  time  have  amounted 
with  regular  interest,  to  a  sum  sufficient  to  purchase  an  annuity  of  five 
hundred  dollars  at  age  sixty ;  and  interest  thereafter  accumulating  shall 
be  paid  to  the  member  at  the  time  of  his  retirement. 

(3)-  The  pension  fund  shall  consist  of  such  amounts  as  shall  be  appro- 
priated by  the  general  assembly  from  time  to  time  on  estimates  submitted 
by  the  retirement  board,  for  the  purpose  of  paying  the  pensions  provided 
for  in  this  act. 

PAYMENT  OF  RETIREMENT  ALLOWANCES 

Section  6.  (i)  Any  member  of  the  retirement  association  may  retire 
from  service  in  the  public  schools  on  attaining  the  age  of  sixty  years  or 
on  the  completion  of  thirty-five  years  of  service  in  the  public  schools  of 
the  state. 

(2)  Any  member  of  the  retirement  association,  if  incapable  of  render- 
ing satisfactory  service  as  a  teacher,  may,  with  the  approval  of  the  retire- 
ment board,  be  retired  by  the  employing  school  board  on  attaining  the  age 
of  fifty-five  years  or  at  any  time  thereafter. 

(3)  Any  member  of  the  retirement  association  on  attaining  the  age  of 
seventy  years,  shall  be  retired  from  service  in  the  public  schools ;  provided, 
however,  that  if  the  employing  committee  shall  so  request  in  writing,  the 
retirement  board  may  permit  the  employment  of  such  member  beyond  the 
age  of  seventy  years ;  and  provided  further,  that  on  the  retirement  of  such 
member  he  shall  receive  from  the  state  the  pension  to  which  he  would 
have  been  entitled  at  age  seventy. 

388 


APPENDICES 

(4)  A  member  of  the  retirement  association  after  his  retirement  under 
the  provisions-  of  paragraphs  one,  two  and  three  of  this  section,  shall  be 
entitled  to  receive  from  the  annuity  fund,  as  he  shall  elect  at  the  time  of 
his  retirement,  on  the  basis  of  tables  adopted  by  the  retirement  board :  (a) 
an  annuity,  payable  in  quarterly  payments,  to  which  the  sum  of  his  assess- 
ments under  section  five,  paragraph  two,  with  regular  interest  thereon, 
shall  entitle  him;  or   (b)   an  annuity  of  less  amount,  as  determined  by 
the  retirement  board  for  the  annuitants  electing  such  option,  payable  in 
quarterly  payments,  with  the  provision  that  on  the  death  of  the  annuitant, 
the  annuity  shall  be  continued  to  and  throughout  the  life  of  such  person  as 
he  shall   nominate   by   written   designation    duly   acknowledged   and   filed 
with  the  retirement  board  at  the  time  of  his  retirement. 

(5)  The  retirement  board  may  offer  other  benefits  of  equal  value  with 
the  benefits  herein  provided  and  the  contributor  retiring  may  accept  either 
the  benefits  herein  provided  or  one  of  said  alternative  benefits  in  lieu 
thereof. 

(6)  Any  member  of  the  retirement  association  receiving  payments  of 
an  annuity  as  provided  in  paragraphs  four  and  five  of  this  section  shall, 
if  not  rendered  ineligible  therefor  by  the  provisions  of  section  eleven  of 
this   act,   receive   with  each  quarterly  payment   of   his   annuity  an  equal 
amount  to  be  paid  from  the  pension  fund  as  directed  by  the  retirement 
board. 

(7)  Any  teacher  who  shall  have  become  a  member  of  the  retirement 
association  under  the  provisions  of  paragraph  numbered  two  of  section 
three,  and  who  shall  have  served  fifteen  years  or  more  in  the  public  schools 
of  the  state,  not  less  than  five  of  which  shall  immediately  precede  retire- 
ment, sMall  on  retiring  as  provided  in  paragraphs  one,  two  and  three  of 
this  section,  be  entitled  to  receive  a  retirement  allowance  as  follows :  (a) 
such  annuity  and  pension  as  may  be  due  under  the  provisions  of  para- 
graphs, four,  five  and  six  of  this  section;  (b)  an  additional  pension  to 
such  an  amount  that  the  sum  of  this  additional  pension  and  the  pension 
provided  in  paragraph  six  of  this  section  shall  equal  the  pension  to  which 
he  would  have  been  entitled  under  the  provisions  of  this  act  if  he  had  paid 
thirty  assessments  on  his  average  yearly  wage  for  the  five  years  preced- 
ing his  retirement  with  interest  thereon  at  three  percent  compounded 
annually;  provided  (i)  that  if  his  term  of  service  in  the  state  shall  have 
been  over  thirty  years  the  thirty  assessments  shall  be  reckoned  as  having 
begun  at  the  time  of  his  entering  service  and  as  drawing  interest  at  three 
percent  compounded  annually  until  the  time  of  retirement;  and  further 
provided,  (2)  that  if  the  sum  of  such  additional  pension  together  with 
the  annuity  and  pension  provided  for  by  paragraphs  four,  five  and  six 
of  this  section  is  less  than  three  hundred  dollars  in  any  one  year,  an 
additional  sum  sufficient  to  make  an  annual  retirement  allowance  of  three 
hundred  dollars  shall  be  paid  from  the  pension  fund. 

(8)  If  at  any  time  it  is  impossible  or  impracticable  to  consult  the 
original  records  as  to  wages  received  by  a  member  during  any  period,  the 
retirement  board  shall  determine  the  pension  to  be  paid  under  paragraph 
(7)  (b)  of  this  section  in  accordance  with  the  evidence  they  may  be  able 
to  obtain. 

WITHDRAWAL   AND   REINSTATEMENT 

Section  7  (i)  Any  member  of  the  retirement  association  withdrawing 
from  service  in  the  public  schools  before  becoming  eligible  to  retirement 
shall  be  entitled  to  receive  from  the  annuity  fund  all  amounts  contributed 
as  assessments,  together  with  regular  interest  thereon,  in  the  manner  here- 
inafter provided. 

(2)  If  such  withdrawal  shall  take  place  before  ten  annual  assessments 

389 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

have  been  paid,  such  member  shall  receive  the  total  amount  to  which  he 
is  entitled  as  determined  by  the  retirement  board  under  the  provisions 
of  this  act  in  one  sum  or  in  four  quarterly  payments  as  the  retirement 
board  may  elect. 

(3)  If  such  withdrawal  shall  take  place  after  ten  annual  assessments 
have  been  paid,  the  amount  so  refunded  shall  be  in  the   form  of  such 
annuity  for  life  based  on  the  contributions  of  such  member,  together  with 
regular  interest  thereon,  as  may  be  determined  by  the  retirement  board 
according  to  its  annuity  tables,   or   in   four  annual  instalments,   as   such 
member  may  elect. 

(4)  If  a  member  of  the  association  withdrawing  and  receiving  pay- 
ments in  accordance  with  paragraphs  two  and  three  of  this  section,  shall 
die  before  the  amount  of  such  payments  equals  the  amount  of  his  con- 
tributions to  the  annuity  fund  with  regular  interest,  the  difference  between 
the  amount  of  such  payments  and  the  amount  of  his  contributions  with 
regular  interest  shall  be  paid  to  his  legal   representatives ;   if,  however, 
no  demand  shall  be  made  on  the  retirement  board  within  six  months  fol- 
lowing the  death  of  such  member  for  the  payment  of  the  sums  due  under 
this  paragraph,  such  sums,  not  exceeding  one  hundred  dollars  in  any  case 
may  then  be  paid  to  such  person  or  persons  as  are  apparently  entitled 
to  the  estate,  and  such  payment  shall  be  a  bar  to  recovery  by  any  other 
person. 

(5)  Any  member  of  the  retirement  association  who  shall  have  with- 
drawn from  service  in  the  public  schools  shall,  on  being  re-employed  in 
the  public  schools,  be  reinstated  in  the  retirement  association  in  accord- 
ance with  such  plans  for  reinstatement  as  the  retirement  board  shall  adopt. 

(6)  If  a  member  of  the  retirement  association  shall  die  before  retire- 
ment, the   full  amount  of   his   contributions  to  the  annunity   fund   with 
regular  interest  to  the  day  of  his  death  shall  be  paid  to  his  legal  repre- 
sentatives ;  if,  however,  no  demand  shall  be  made  on  the  retirement  board 
within  six  months  following  the  death  of  such  member,  for  the  payment 
of  the  sums  due  under  this  paragraph  such  sums  not  exceeding  one  hun- 
dred dollars  in  any  case,  may  then  be  paid  to  such  person  or  persons  as 
are  apparently  entitled  to  the  estate,  and  such  payment  shall  be  a  bar 
to  recovery  by  any  other  person. 

TAXATION,    ATTACHMENTS    AND    ASSIGNMENTS 

Section  8.  That  portion  of  the  salary  or  wages  of  a  member  deducted 
or  to  be  deducted  under  this  act.  the  right  of  a  member  to  an  annuity  or 
pension,  and  all  his  rights  in  the  funds  of  the  retirement  system,  shall 
be  exempt  from  taxation,  and  from  the  operation  of  any  laws  relating 
to  bankruptcy  or  insolvency,  and  shall  not  be  attached  or  taken  upon 
execution  or  other  process  of  any  court.  No  assignment  of  any  right 
in,  or  to  said  funds  shall  be  valid.  The  funds  of  the  retirement  system, 
so  far  as  invested  in  personal  property,  shall  be  exempt  from  taxation. 

DUTIES    OF    THE    SCHOOL    COMMITTEE 

Section  9.  (i)  The  school  committee  or  board  of  education  of  each 
town,  city,  or  district  in  the  state  shall,  before  employing  in  any  teaching 
position  any  person  to  whom  this  act  may  apply,  notify  such  person  of 
his  duties  and  obligations  under  this  act  as  a  condition  of  his  employment. 

(2)  On  or  before  October  first  of  each  year  the  school  committee  or 
board  of  education  of  each  town,  city  and  district  in  the  state  shall  certify 
to  the  retirement  board  the  names  of  all  teachers  to  whom  this  act  shall 
apply. 

(3)  The  school  committee  or  board  of  education  of  each  town,  city,  and 

390 


APPENDICES 

district  in  the  state  shall,  on  the  first  day  of  each  calendar  month, 
notify  the  retirement  board  of  the  employment  of  new  teachers,  removals, 
withdrawals,  and  changes  in  salary  of  teachers  that  shall  have  occurred 
during  the  month  preceding. 

(4)  Under  the  direction  of  the  retirement  board  the  school  committee 
or  board  of  education  of  each  town,  city  and  district  in  the  state  shall 
furnish  such  other  information  as  the  board  may  require  relevant  to  the 
discharge  of  the  duties  of  the  board. 

(5)  The  school  committee  or  board  of  education  of  each  town,  city 
and  district  in  the  state  shall,  as  directed  by  the  retirement  board,  deduct 
from  the  amount  of  the  salary  due  each  teacher  employed  in  the  public 
schools  of  such  town,  city  or  district,  such  amounts  as  are  due  as  contri- 
butions to  the  annuity  fund  as  prescribed  in  this  act,  shall  send  to  the 
treasurer  of  said  town,  city  or  district  a  statement  as  voucher  for  such 
deductions  and  shall  send  a  duplicate  statement  to  the  secretary  of  the 
retirement  board. 

(6)  The  school  committee  or  board  of  education  of  each  town,  city  and 
district  in  the  state  shall  keep  such  records  as  the  retirement  board  may 
require. 

CUSTODY    AND    INVESTMENT    OF    FUNDS 

Section  10.  (i)  The  treasurer  of  each  town,  city  and  district  in  the 
state  on  receipt  from  the  school  committee  or  board  of  education  of  the 
voucher  for  deductions  from  the  teachers'  salaries  provided  for  in  sec- 
tion nine  shall  transmit,  monthly,  the  amounts  specified  in  such  voucher 
to  the  secretary  of  the  retirement  board. 

(2)  The  secretary  of  the  retirement  board  shall  monthly  pay  to  the 
treasurer   of   the   state   all   sums   collected   by  him  under   the   provisions 
of  paragraph  one  of  this  section. 

(3)  All  funds  of  the  retirement  system  shall  be  in  custody  and  charge 
of  the  treasurer  of  the  state  and  the  treasurer  shall  invest  such  funds  as  are 
not  required  for  current  disbursements  in  accordance  with  the  laws  of 
the   state  governing  the   investment  of   savings  banks   funds.     He   may, 
whenever  he  sells  securities,  deliver  the  securities  so  sold  upon  receiving 
the  proceeds  thereof,  and  may  execute  any  or  all  documents  necessary 
to  transfer  the  title  thereto. 

(4)  The  treasurer  of  the  state  shall  make  such  payments  to  members 
of  the  retirement  association   from  the  annuity  fund  and  pension   fund 
as  the  retirement  board  shall  order  to  be  paid  in  accordance  with  sections 
six  and  seven  of  this  act. 

(5)  On  or  before  the  third  Wednesday  in  January,  the  treasurer  of  the 
state  shall  file  with  the  insurance  commissioner  for  the  state,  and  with  the 
secretary    of    the    retirement    board,    a    sworn    statement    exhibiting    the 
financial   condition   of   the   retirement   system   on   the  thirty-first   day   of 
the  preceding  December  and  its  financial  transactions  for  the  year  ending 
at  such   date.     Such   statement   shall   be  in  the   form   prescribed  by  the 
retirement  board  and  approved  by  the  insurance  commissioner. 

MEMBERSHIP    IN    OTHER    RETIREMENT    ASSOCIATIONS 

Section  n.  (i)  No  person  required  to  become  a  member  of  the  asso- 
ciation under  the  provisions  of  paragraph  numbered  one  of  section  three 
of  this  act  shall  be  entitled  to  participate  in  the  benefits  of  any  other 
teachers'  retirement  system,  supported  in  whole  or  in  part  by  funds  raised 
by  taxation. 

(2)  No  member  of  the  retirement  association  shall  be  eligible  to  receive 

391 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

any  pension  as  described  in  section  six  of  this  act,  who  is  at  the  time  in 
receipt  of  a  pension  paid  from  funds  raised  in  whole  or  part  by  taxation. 

REIMBURSEMENT    OF    CITIES    AND    TOWNS 

Section  12.  (i)  Whenever,  after  the  first  day  of  July,  nineteen  hundred 
and  seventeen,  a  town,  city  or  district  retires  a  teacher  who  is  not  eligible 
to  a  pension  under  the  provisions  of  paragraph  numbered  six  in  section  six 
of  this  act,  and  pays  to  such  teacher  a  pension  and  the  school  committee 
or  board  of  education  of  said  town,  city  or  district  certifies  under  oath 
to  the  retirement  board  to  the  amount  of  said  pension,  said  town  or  city 
shall  be  reimbursed  therefor  biennially  by  the  state :  provided,  that  no  such 
reimbursement  shall  be  in  excess  of  the  amount  as  determined  by  the 
retirement  board,  to  which  said  teacher  would  have  been  entitled  as  a 
pension,  had  he  become  a  member  of  the  retirement  association  under 
the  provisions  of  paragraph  numbered  two  in  section  three  of  this  act. 

(2)  On  or  before  the  first  Wednesday  of  January,  nineteen  hundred 
and  nineteen  and  biennially  thereafter  the  retirement  board  shall  present 
to  the  general  assembly,  a  statement  of  the  amount  expended  during  the 
two  years  ending  on  the  preceding  first  day  of  July  by  cities  and  towns 
in  the  payment  of  pensions  under  the  provisions  of  the  preceding  para- 
graph, for  which  such  cities  and  towns  should  receive  reimbursement. 
On  the  basis  of  such  a  statement,  the  general  assembly  may  make  an 
appropriation  for  the  reimbursement  of  such  cities  and  towns  up  to  such 
first  day  of  July. 

NEW  JERSEY 

Laws  of  1919.  Chapter  80  (e),  an  Act  to  amend  "An  act  to  establish  a 

thorough  and  efficient  system  of  free  public  schools,  and  to  provide 

for  the  maintenance,  support  and  management  thereof," 

approved  October  nineteenth,  one  thousand 

nine  hundred  and  three. 

BE  IT  ENACTED  by  the  Senate  and  General  Assembly  of  the  State  of 
New  Jersey. 

PREAMBLE 

WHEREAS,  In  the  advancement  of  public  policy  there  has  been  established 
in  this  State  a  retirement  fund  to  which  public  school  teachers  are  re- 
quired to  contribute  and  which  was  designed  to  provide  an  annuity  to 
any  member  disabled  after  twenty  or  more  years  of  service,  and  the 
State  has  provided  a  non-contributory  pension  for  any  teacher  who 
teaches  thirty-five  years ;  and 

WHEREAS  After  two  years  of  investigation  conducted  with  the  assistance 
of  pension  experts  and  actuaries  employed  by  it,  the  Pension  and  Re- 
tirement Fund  Commission  created  by  the  act  of  the  Legislature,  J.  R. 
II,  P.  L.  1917,  and  J.  R.  3,  P.  L.,  1918,  has  found  that  the  two  retirement 
systems  conflict  with  each  other  in  their  operation  and  thereby  create 
embarrassment  in  the  administration  of  school  affairs,  and  in  many  in- 
stances give  double  retirement  benefits  to  the  teachers,  amounting  on 
an  average  to  more  than  the  salary  received  by  the  teachers  when  in 
active  service ;  and 

WHEREAS,  The  actuary  employed  by  the  State  Teachers'  Association  and 
the  actuary  of  the  commission  both  report  that  the  liabilities  of  the 
Teachers'  Retirement  Fund  are  far  in  excess  of  its  present  and  pros- 
pective assets,  which  indicates  that  the  contributions  of  present  teachers 
are  being  used  for  the  payment  of  annuities  to  teachers  now  retired, 

392 


APPENDICES 

thereby  exhausting  the  funds  which  should  be  kept  in  reserve  for  the 
benefit  of  present  teachers,  with  the  result  that  a  majority  of  those  now 
contributing  will  be  unable  to  receive  the  benefits  promised  under  the 
fund;  and 

WHEREAS,  Inasmuch  as  the  State  of  New  Jersey  by  legislative  enactment 
has  compelled  its  teachers  to  contribute  to  this  fund  which  is  in  an  un- 
sound financial  Condition,  it  is  the  duty  of  the  Legislature  td  correct  as 
far  as  possible  the  injustice  and  embarrassment  occasioned  by  such 
conditions,  which  are  detrimental  to  the  welfare  of  the  teachers  and  the 
school  system ;  and 

WHEREAS,  It  is  recognized  as  an  established  State  policy  that  the  teachers 
of  our  public  schools  should  be  given  protection  against  disability  and 
old  age  and  that  such  protection  should  be  provided  by  a  retirement 
system  established  on  a  scientific  basis  that  will  truly  advance  the  best 
interests  of  our  educational  system  and  protect  the  future  well  being 
of  the  teachers ;  therefore, 
I.  The  act  to  which  this  act  is  an  amendment  is  hereby  amended  by  the 

addition  of  a  new  article,  which  shall  be  known  as  Article  XXVIII,  and 

which  shall  contain  sections  247  to  256,  inclusive. 

ARTICLE  XXVIII 

TEACHERS'  PENSION  AND  ANNUITY  FUND 
DEFINITIONS 

247.  (i)  The  following  words  and  phrases  used  in  this  act  shall  have 
the  following  meanings  unless  a  different  meaning  is  plainly  required  by 
the  context : 

(2)  "Retirement    System,"    shall    mean    the    "Teachers'    Pension    and 
Annuity  Fund,"  created  by  section  two  hundred  and  forty-eight  of  this 
article. 

(3)  "Teachers'  Retirement  Fund"  shall  mean  the  Teachers'  Retirement 
Fund  of  the  State  of  New  Jersey  as  created  by  chapter  32,  P.  L.  1896; 
chapter  178,  P.  L.  1899;  chapter  96,  P.  L.  1900;  chapter  36,  P.  L.   1902; 
chapter   i,   Second   Special   Session   P.   L.   1903;   chapter  95,  P.  L.   1905; 
chapter  314,  P.  L.  1906;  chapter  139,  P.  L.  1907,  and  amendments  thereto 
and  supplements  thereof. 

(4)  "Board  of  Trustees"  shall  mean  the  board  provided  for  in  section 
two  hundred  and  fifty-five  of  this  article. 

(5)  "Commissioner   of   Education"   shall   mean   the   Commissioner   of 
Education  of  the  State  of  New  Jersey. 

(6)  "Employer"  shall  mean  the  State  of  New  Jersey,  or  the  school 
district,  normal  school  district,  board  or  other  agency  of  and  within  the 
State  by  which  the  teacher  is  paid. 

(7)  "Teacher"  shall  mean  any  regular  teacher,  special  teacher,  helping 
teacher,    teacher-clerk,    principal,    vice-principal,    supervisor,    supervising 
principal,  director,  superintendent,  city  superintendent,  assistant  city  super- 
intendent,  county  superintendent,   State   commissioner   or   assistant   com- 
missioner of  education  and  other  member  of  the  teaching  or  professional 
staff  of  any  class,  public  school,  high  school,  normal  school,  model  school, 
training  school,  vocational  school,  truant  reformatory  school,  or  parental 
school,  and  of  any  and  all  classes  or  schools  within  the  State  of  New 
Jersey   conducted   under   the  order  and   superintendence,   and   wholly  or 
partly  at  the  expense  of  the  State  Board  of  Education,  of  a  duly  elected 
or   appointed   board   of   education,   board   of   school    directors,   or  board 
of  trustees  of  the  State  or  of  any  school  district  or  normal  school  district 
thereof,  and  any  such  person  under  contract  or  engagement  to  perform  one 

393 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

or  more  of  these  functions ;  provided,  that  no  person  shall  be  deemed 
a  teacher  within  the  meaning  of  this  article  who  is  a  substitute  teacher 
or  is  a  teacher  not  regularly  engaged  in  performing  one  or  more  of  these 
functions  as  a  full-time  occupation  outside  of  vacation  periods.  In  all 
cases  of  doubt  the  board  of  trustees  shall  determine  whether  any  person 
is  a  teacher  as  denned  in  this  article. 

(8)  "Present-entrant"    shall   mean   any  teacher  who   is  a  member  of 
the  retirement  system  under  the  provisions  of  class  B,  C,  D  and  E  under 
sub-section   (2)   of  section  two  hundred  and  forty-nine  of  this  article. 

(9)  "New-entrant"  shall  mean  any  teacher  who  is  a  member  of  the 
retirement    system,    except    a    present    entrant. 

(10)  "Contributor"  shall  mean  any  person  who  has  an  account  in  the 
annuity    savings    fund. 

(n)  "Beneficiary"  shall  mean  any  person  in  receipt  of  a  retirement 
allowance  or  other  benefit  as  provided  in  this  article. 

(12)  "School  Service"  shall  mean  any  service  as  a  teacher  as  defined 
by   sub-section    (7)    of   this   section. 

(13)  "School  Year"  shall  mean  the  official  school  year  of  the  school 
district  or  the  institution  in  which  a  teacher  is  employed. 

(14)  "Regular  Interest"   shall  mean  interest  at   four  per  centum  per 
annum,   compounded  annually. 

(15)  "Accumulated  Deductions"  shall  mean  the  total  of  the  amounts 
deducted  from  the  salary  of  a  contributor  and  credited  to  his  individual 
account  in  the  annuity  savings   fund  together  with  the  interest  thereon. 
Regular  interest  shall  be   computed  and  allowed  on   such  total  or  part 
thereof  when  used  for  the  purchase  from  the  retirement  system  of  a  re- 
tirement annuity.     Interest  at  the  rate  of  three  and  one-half  per  centum 
per  annum,  compounded  annually,  shall  be  computed  and  paid  on  such 
total  amounts  or  part  thereof  when  withdrawn  for  any  other  purpose. 

(16)  "School  Apportionment  Fund"  shall  mean  the  moneys   retained 
in  the  State  Treasury  to  be  apportioned  to  the.   several  counties  of  the 
State  by  the  Comptroller  for  school  purposes,  as  defined  in  chapter  146, 
P.   L.    1906,   and   chapter  65,    P.    L.    1909. 

(17)  "Average  Salary"  shall  mean  the  average  annual  salary  earnable 
by  and  as  a  teacher   for  the  last  five  years  preceding   retirement. 

(18)  "Pension"    shall   mean   annual   payments    for   life   derived    from 
the  pension  fund  or  from  the  pension  reserve   fund  as  provided  in  this 
article.     All  pensions  shall  be  paid  in  monthly  installments. 

(19)  "Annuity"  shall  mean  payments  for  life  derived  from  contribu- 
tions made  by  a  contributor  as  provided  in  this  article.     All  annuities  shall 
be  paid  in  monthly  installments. 

(20)  "Retirement     Allowance"     shall     mean     the     pension     plus     the 
annuity. 

(21)  "Pension   Reserve"   shall   mean   the   present  value   computed   on 
the  basis  of  such  mortality  tables  as  shall  be  adopted  by  the  board^of 
trustees,   with   regular   interest  of   the   future   payments   to   be   made   on 
account  of  any  pension  granted  to  a  member. 

(22)  "Annuity  Reserve"  shall  mean  the  present  value  commuted  on  the 
basis  of  such  mortality  tables  as  shall  be  adopted  by  the  board  of  trustees 
with  regular  interest  gf  the  future  payments  to  be  made  on  account  of  any 
annuity  granted  to  a  member. 

ESTABLISHMENT    OF    SYSTEM 

248.  (i)  A  retirement  system  for  public  school  teachers  is  hereby 
created  and  established  to  be  known  as  the  "Teachers'  Pension  and 
Annuity  Fund,"  and  shall  include  the  several  funds  created  and  placed 


APPENDICES 

under  the  management  of  the  board  of  trustees  as  provided  by  this  article 
for  the  purpose  of  paying  retirement  allowances  and  other  benefits  here- 
inafter provided  to  or  on  account  of  the  teachers  who  become  members  of 
said  system. 

(2)  The  retirement  system  so  created  shall  have  the  powers  and 
privileges  of  a  corporation,  and  under  its  corporate  name  all  its  business 
shall  be  transacted,  all  funds  invested,  all  warrants  for  money  drawn  and 
payments  made,  and  all  cash  and  securities  and  other  property  shall  be  held. 

MEMBERSHIP 

249.  (i)  Membership  in  the  retirement  system  shall  begin  not  earlier 
than  the  first  day  of  September,  nineteen  hundred  and  nineteen. 

(2)  The  membership  of  the  retirement  system  shall  consist  of  the 
following  classes  of  teachers : 

Class  A.  All  persons  w.ho  become  teachers  after  the  first  day  of 
September,  nineteen  hundred  and  nineteen,  and  whose  appointment 
is  made  subsequent  to  the  passage  of  this  act,  shall  become  members  of 
the  retirement  system  by  virtue  of  their  appointment  as  teacher;  provided, 
that  any  person  who  may  become  a  teacher  after  September  first,  nineteen 
hundred  and  nineteen,  who  before  the  passage  of  this  act  shall  have  made 
an  agreement  to  teach  in  the  schools  of  this  State  as  a  consideration  for 
the  instruction  received  in  any  normal  school  of  the  State  shall  not  be 
compelled  during  the  life  of  such  agreement  to  become  a  member  of  the 
retirement  system  when  he  shall  enter  the  service  as  a  teacher,  but  shall, 
however,  become  a  member  after  the  expiration  of  such  agreement  by 
virtue  of  any  subsequent  appointment  as  teacher,  but  he  may  become  a 
member  at  any  time  by  filing  an  application  as  hereinafter  described; 
provided,  further,  that  any  person  who  shall  have  signed  a  contract  for 
the  position  of  a  teacher  prior  to  the  passage  of  this  act,  whose  services 
thus  contracted  for  shall  extend  beyond  the  first  day  of  September,  nine- 
teen hundred  and  nineteen,  shall  not  be  compelled  to  become  a  member 
of  the  retirement  system  when  he  shall  enter  the  service  under  such 
contract  as  a  teacher,  but  he  may  do  so  by  filing  an  application  as  herein- 
after described. 

Class  B.  All  teachers  in  the  service  on  September  first,  nineteen  hun- 
dred and  nineteen,  who  are  not  members  of  the  Teachers'  Retirement 
Fund  at  the  time  of  the  passage  of  this  act,  who,  during  their  service  as 
a  teacher  on  or  before  the  first  day  of  September,  nineteen  hundred  and 
twenty,  shall  file  with  the  board  of  trustees  an  application  for  membership. 

Class  C.  All  teachers  in  the  service  on  September  first,  nineteen  hun- 
dred and  nineteen,  who  became  members  of  the  Teachers'  Retirement 
Fund  by  virtue  of  their  appointment  as  teacher  since  January  first,  nine- 
teen hundred  and  eight,  who  during  their  service  as  a  teacher  on  or  before 
the  first  day  of  September,  nineteen  hundred  and  twenty,  shall  file  with 
the  board  of  trustees  an  application  for  membership. 

Class  D.  All  teachers  in  the  service  on  September  first,  nineteen 
hundred  and  nineteen,  who  became  members  of  the  Teachers'  Retirement 
Fund  before  the  first  day  of  January,  nineteen  hundred  and  eight,  and 
who  during  their  service  as  a  teacher  on  or  before  the  first  day  of  Septem- 
ber, nineteen  hundred  and  twenty,  shall  file  with  the  board  of  trustees  an 
application  for  membership. 

Class  E.  All  teachers,  who  do  not  come  under  the  provisions  of  class 
A,  B,  C  or  D,  who  within  a  year  after  their  appointment  or  after  the 
passage  of  this  act,  shall  file  with  the  board  of  trustees  an  application  for 
membership. 

395 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

(3)  Application  for  membership  under  class  B,  C,  D  and  E,  and  the 
certificate  of  enrollment  in  case  of  class  A  member,  shall  be  in  such  form 
and  contain   such  information  as  the  board  of   trustees   shall   designate, 
and  furthermore,  the  application  for  membership  in  case  of  class   C,  D 
and  E  shall  contain  a  waiver  of  all  rights  and  privileges  as  a  member 
or   prospective   beneficiary   of    the   Teachers'   Retirement   Fund. 

The  board  of  trustees  shall  file  one  copy  of  the  application  for  member- 
ship or  certificate  of  enrollment  in  the  retirement  system  as  a  permanent 
record  in  its  office,  and  one  copy  with  the  employer  of  the  applicant,  which 
shall  constitute  a  notice  to  such  employer  to  deduct  the  percentage  of  salary 
as  defined  by  this  article. 

(4)  The  board  of  trustees  may,   in   its  discretion,   extend  the  period 
for   filing  any  application   for  membership  provided   for   herein,   but  no 
extension   shall   carry   the   date   beyond   the   year   nineteen    hundred   and 
twenty   three. 

(5)  Any  teacher  who  does  not  elect  to  become  a  member  while  eligible 
to  membership  under  the  provisions  as  to  class  B,  C,  D  or  E,  and  who  is 
not  eligible  to  membership  under  the  provisions  as  to  class  A,  may  become 
a  member  thereafter  upon  application  in  accordance  with  the  rules  and 
regulations  of  the  board  of  trustees,  but  with  a,  limited  allowance  for  prior 
service  as  hereinafter  provided  for  new-entrants. 

(6)  This  board  of   trustees  may,  in  its  discretion,  deny  the  right  to 
become   members  to   any  class   of   teachers   whose   compensation   is   only 
partly  paid  by  the  State,  or  who  are  serving  on  a  temporary  or  any  other 
than  a  per  annum  basis,  and  it  may  also,  in  its  discretion,  make  optional 
with  members  in  any  such  class  their  individual  entrance  into  membership. 

(7)  The  membership  of  any  person  in  the  retirement  system  shall  cease 
if  he  shall  be  continuously  absent  without  pay  for  a  period  of  more  than 
two  years,  or  if  in  any  five-year  period  after  he  last  became  a  member,  he 
shall  render  less  than  two  years  of  school-service,  or  upon  the  withdrawal 
by  _  a    contributor    of    his    accumulated    deductions    as    provided    in    this 
article  or  upon  retirement  on  a  pension,  or  at  death  but  not  otherwise,  ex- 
cept as  provided  in  this  article. 


SERVICE  CREDITABLE 

250.  (i)  In  addition  to  the  application  required  in  subsection  (3) 
of  section  two  hundred  and  forty-nine  of  this  article  each  present-entrant 
shall  file  a  detailed  statement  under  oath  of  all  school-service  and  service 
in  a  similar  capacity  in  other  States  rendered  by  him  prior  to  the  first 
day  of  September,  nineteen  hundred  and  nineteen,  for  which  he  claims 
credit,  and  of  such  other  facts  as  the  board  of  trustees  may  require 
for  the  proper  operation  of  the  retirement  system. 

(2)  Each  new-entrant  shall  file  a  detailed  statement  of  school-service 
and  service  in  a  similar  capacity  in  other  States  rendered  by  him  prior 
to  so  becoming  a  member  for  which  he  desires  credit  and  on  account 
of  which  he  desires  to  contribute  and  of  such  other  facts  as  the  board  of 
trustees  may  require  for  the  proper  operation  of  the  system. 

(3)  The   board   of   trustees   shall   fix   and   determine   by  appropriate 
rules   and   regulations  how  much  service   in   any  year   is  the   equivalent 
of  a   year   of   service,   but   in   computing   such    service,   or   in   computing 
average   compensation,   it   shall   credit   no   time   during  which   a  member 
was  absent  without  pay  for  a  period  of  more  than  a  month's  duration, 
nor  shall  more  than  one  year  of  service  be  credited  for  all  service  in  any 
calendar  year. 

396 


APPENDICES 

(4)  Subject  to   the  above   restrictions   and   to    such    other   rules   and 
regulations  as  the  board  of  trustees  shall  adopt,  said  board  shall  verify  as 
soon  as  practicable  the  statement  of  service  submitted,  and  shall  issue  to 
the  member  a  prior-service  certificate  certifying  to  the  aggregate  length  of 
such  prior  service. 

(5)  In  such  prior-service  certificate,  a  present-entrant  shall  be  credited 
up   to    the   nearest   number   of   years   and    months    with   all    service    not 
exceeding    thirty-five   years,    which    he    rendered   as    a    teacher   prior    to 
September  first,  nineteen  hundred  and  nineteen,  including  not  more  than 
ten  years  of  service  in  a  similar  capacity  in  other  States. 

(6)  In  his  prior-service  certificate,  a  new-entrant  shall  be  credited  in 
full  up  to  the  nearest  number  of  years  and  months,  but  not  exceeding 
ten  years,  with  all  service  rendered  by  him  as  a  teacher  in  public  schools 
in  or  outside  of  New  Jersey  prior  to  becoming  a  member,  for  which  he 
desires  credit  and  on  account  of  which  he  desires  to  contibute. 

(7)  So  long  as  membership  continues,  a  prior-service  certificate  shall 
be  final  and  conclusive  for  retirement  purpose  as  to  such  service,  unless 
thereafter  modified  by  the  board  of  trustees  upon  the  application  made  by 
the  member  within  one  year  after  the  date  of  issuance  or  modification 
of  a  prior-service  certificate  or  upon  the  discovery  by  the  board  of  trustees 
of  an  error  or  fraud.     When  membership  ceases,  such  certificate  shall  be 
void,   but   upon   membership   being   resumed   the   prior-service   certificate 
shall  be  restored  for  the  same  number  of  years  of  prior  service  as  were 
previously  credited  less  a  deduction  of   one  year   for  each  year  during 
which  the  teacher  was  not  a  member  of  the  retirement  system  since  the 
issuance   of   the   initial   prior-service   certificate. 

(8)  At  retirement  the  total   service  credited  a  member  shall   consist 
of  the  service  rendered  by  him  during  his  membership,  and  if  he  has  a 
prior-service  certificate  which  is  in  full  force  and  effect,  for  all  service 
certified  on  such  certificate. 

BENEFITS 

Superannuation   Retirement. 

251.  (i)  A  member  who  has  attained  the  age  of  sixty-two  (62)  may 
retire  upon  his  request  or,  upon  the  request  of  his  employer,  shall  be  re- 
tired from  the  service  if  a  written  statement  duly  attested  is  filed  by  him 
or  by  his  employer  with  the  board  of  trustees  setting  forth  at  what  time 
subsequent  to  the  execution  and  filing  thereof  he  or  his  employer  desires 
such  retirement.  The  board  of  trustees  shall  retire  said  member  at  the 
time  specified  or  at  such  other  time  within  thirty  days  after  the  date  so 
specified  as  the  board  of  trustees  may  find  advisable.  Any  present-entrant 
who  is  not  covered  by  the  tenure  of  office  law  who  prior  to  the  first  day 
of  November,  one  thousand  nine  hundred  and  nineteen,  shall  become  a 
member  of  the  retirement  system,  and  who  shall  be  credited  in  his  prior- 
service  certificate  with  thirty-five  or  more  years  of  service,  who  shall 
lose  his  position  before  attaining  the  age  of  sixty-two  (62)  years,  shall 
be  retired  on  a  total  retirement  allowance  of  one-half  of  his  average  salary. 

(2)  After  the  first  day  of  January  of  the  year  nineteen  hundred  and 
twenty-six,  each  and  every  member  who  has  attained  or  shall  attain  the 
age  of  seventy   (70)   shall  be  retired  by  the  board  of  trustees  from  the 
service  forthwith,  or  at  such  time  within  a  year  thereafter  as  it  shall  deem 
advisble. 

(3)  Upon  superannuation  retirement  a  present-entrant  shall  receive  a 
retirement  allowance  which  shall  consist  of : 

(a)  An  annuity  which  shall  be  the  actuarial  equivalent  of  his  ac- 
cumulated deductions  at  the  time  of  his  retirement. 

397 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

(b)  A  pension   in   addition   to  the  annuity,   of   one  one-hundred  and 
fortieth    (i/i40th)    of   his   average   salary   multiplied   by   the   number   of 
years  of  service  he  has  rendered  since  he  became  a  member. 

(c)  A    further    pension    of    one    seventieth    (i/7Oth)    of    his    average 
salary  multiplied  by  the  number  of  years  of  service  certified  on  his  prior- 
service  certificate. 

(d)  And  if  such  person  shall  have  been  a  member  of  the  Teachers' 
Retirement  Fund  prior  to  his  becoming  a  member  of  the  retirement  sys- 
tem, a  further  additional  pension  which  shall  be  the  actuarial  equivalent 
of    the   contributions   without    interest,   which   he   paid   to   the    Teachers' 
Retirement  Fund  prior  to  the  first  day  of  September,  nineteen  hundred 
and  nineteen,  which  he  has  not  otherwise  received. 

(4)  Upon    superannuation    retirement    a    new-entrant    shall    receive    a 
retirement  allowance  which  shall  consist  of : 

(a)  An   annuity   which    shall   be   the   actuarial   equivalent   of    his    ac- 
cumulated   deductions   at   the    time   of   his    retirement,    and 

(b)  A  pension,  in  addition  to  the  annuity,  of  one  one  hundred  and 
fortieth    (i/i40th)    of   his   average   salary   multiplied   by   the   number   of 
years  of   his  total  service. 

(5)  The  total  retirement  allowance  granted  to  a  person  with  twenty 
or  more  years  of  service  who  has  attained  the  age  of  sixty-two  (62)  shall 
in  no  case  be  less  than  four  hundred  dollars  per  annum. 

Disability  Retirement. 

(6)  Retirement  for  disability  of  a  teacher  who  is  a  member  shall  be 
made  by  the  board  of  trustees  upon  the  application  of  his  employer  or 
upon  his  own  application  or  that  of  a,  person  acting  in  his  behalf,  on  a 
disability  allowance  if  he  is  under  the  age  of  sixty-two   (62)  years,  pro- 
vided the  board  of  trustees,  after  a  medical  examination  of  said  member, 
made  at  the  place  of  his  residence  within  the  State  or  other  place  mutually 
agreed  upon,  by  a  physician  or  physicians  designated  by  said  board,  shall 
determine   upon   the   basis   of   a    report   submitted   by   said   physician    or 
physicians   that  the  said  member   is  physically  or  mentally  incapacitated 
for  the  performance  of  duty  and  that  said  member  ought  to  be  retired; 
and  further  provided,  that  the  said  member  has  rendered  ten  years  of 
service  as  a  teacher  in  New  Jersey,  and  if  he  is  a  new-entrant,  has  also 
been  a  member  of  the  retirement  system  for  ten  years. 

Should  the  applicant  for  a  disability  retirement  be  dissatisfied  with  the 
decision  of  the  board  of  trustees,  appeal  may  be  made  to  the  State  Board 
of  Education  and  the  decision  of  the  latter  shall  be  final  and  binding 
upon  all  parties. 

(7)  On   retirement   for  disability,  a  teacher  who  is  a  member  shall 
receive  a  retirement  allowance  which  shall  consist  of : 

(a)  An  annuity  which  shall  be  the  actuarial  equivalent  of  his  accumu- 
lated deductions  at  the  time  of  his  retirement : 

(b)  A  pension   which   together  with  his   annuity  provided  under  the 
paragraph  immediately  preceding  shall  be  sufficient  to  produce  a  retire- 
ment allowance  of  one-seventieth  of  his  average  salary  multiplied  by  the 
number  of  years   of  his  total   service  but  not  less  than   three  hundred 
dollars  per  annum  or  thirty  per  centum  of  said  average  salary,  with  the 
exception  that  in  no  case  shall  the  allowance  exceed  nine-tenths  of  the 
rate  of  retirement  allowance  to  which  he  might  have  been  entitled  had 
retirement  been   deferred  until   the  age  of   sixty-two    (62). 

(c)  And  if  such  person  shall  have  been  a  member  of  the  Teachers' 
Retirement  Fund  prior  to  his  becoming  a  member  of  the  retirement  sys- 

398 


APPENDICES 

tern,  a  further  additional  pension,  which  shall  be  the  actuarial  equivalent 
of  the  contributions  without  interest,  which  he  paid  to  the  Teachers' 
Retirement  Fund  prior  to  the  first  day  of  September,  nineteen  hundred 
and  nineteen,  which  he  has  not  otherwise  received. 

(8)  Once  each  year  during  the  first  five  years  following  the  retire- 
ment of  the  teacher  on  a  disability  allowance  and  once  in  every  three- 
year  period  thereafter,  the  board  of  trustees  may,  and  upon  his  application 
shall,  require  any  disability  beneficiary  who  is  under  the  age  of  sixty-two 
(62)  years  to  undergo  medical  examination  by  a  physician  or  physicians 
designated  by  the  board  of  trustees,  said  examination  to  be  made  at  the 
place  of  residence  of  said  beneficiary  or  other  place  mutually  agreed  upon. 
Should  such  physician  or  physicians  thereupon  report  and  certify  to  the 
board  of  trustees  that  such  disability  beneficiary  is  not  totally  incapacitated 
either  physically  or  mentally  for  the  performance  of  duty  and  that  such 
disability  beneficiary  is  engaged  in  or  is  able  to  engage  in  a  gainful  occu- 
pation and  should  the  board  of  trustees  concur  in  such  report,  then  the 
amount  of  his  retirement  allowance  shall  be  reduced  to  an  amount  which, 
when   added   to   the   amount  then   earned   by   him    shall   not   exceed   the 
amount    of    his    average    salary.      Should    his    earning   capacity   be    later 
changed,  then  the  amount  of  his   retirement  allowance   may  be   further 
altered :   provided,   that  the   new   retirement   allowance   shall   not   exceed 
the  amount  of  the  retirement  allowance  originally  granted  or  an  amount 
which  when  added  to  the  amount  earned  by  the  beneficiary,  exceeds  the 
amount   of   his  average   salary.     Should   a   disability  beneficiary  who   is 
under  the  age   of   sixty-two    (62)    years   refuse   to   engage   in   a  gainful 
occupation  when  qualified  so  to  do  and  further  refuses  a  position  in  the 
public  schools  offered  to  him,  the  board  of  trustees  may  reduce  his  re- 
tirement allowance  to  half  of  its   former  rate. 

(9)  Should  any  disability  beneficiary,  under  the  age  of  sixty-two  (62) 
years,  refuse  to  submit  to  a  medical  examination  as  provided  under  the 
subsection  immediately  preceding,  his  retirement  allowance  may  be  dis- 
continued until  his  withdrawal  of  such  refusal,  and  should  such  refusal 
continue  for  one  year,  all  his  rights  in  and  to  such  retirement  allowance 
may  be  forfeited. 

(10)  Should  a  disability  beneficiary  be  restored  to  active  service  at  a 
salary   equal   to   that    formerly   received,   his    retirement   allowance    shall 
cease   and   he   shall   again   become  a   member  of   the   retirement   system, 
and   his   annuity  reserve   shall  be  transferred  from   the   annuity   reserve 
fund  to  the  annuity  savings  fund  and  credited  to  his  individual  account 
as  a  part  of  his  accumulated  deductions  in  the  latter  fund,  and  he  shall 
contribute  to  the  said   fund  thereafter  in  the  same  manner  and  at  the 
same  rate  as  he  paid  upon  his  disability.     Upon  his  restoration  to  active 
service  his  pension  reserve  in  the  pension  reserve   fund  shall  be  trans- 
ferred to   the  pension   accumulation    fund.     His   prior-service   certificate 
on  the  basis  of  which  his  service  was  computed  at  the  time  of  his  re- 
tirement shall  be  renewed  and  shall  again  be  in  full  force  and  effect,  and 
in  addition  upon  his  subsequent  retirement  he  shall  be  credited  with  all 
his  service  as  a  member  subsequent  to  the  period  covered  by  his  prior- 
service  certificate,  anything  to  the  contrary  in  this  act  notwithstanding. 
Withdrawal  and  Death  Benefits. 

(n)  A  contributor  who  withdraws  from  service  or  ceases  to  be  a 
teacher  for  any  cause  other  than  death  or  retirement,  shall  be  paid  on 
demand  the  accumulated  •  deductions  standing  to  the  credit  of  his  indi- 
vidual account  in  the  annuity  savings  fund. 

399 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

(12)  The  board  of  trustees  may,  in  its  discretion,  withhold  for  not 
more  than  one  year  after  a  member  last  rendered  school-service  all  or 
part  of  his  accumulated  deductions,  if,  before  he  last  became  a  member, 
he  withdrew   from  the  annuity  savings  fund  all  or  part  of  his  accumu- 
lated deductions  and   failed  to  redeposit  such  withdrawn  amount  to  the 
credit  of  his  individual  account  in  such  fund. 

(13)  Should  a  contributor  die  before  retirement  his  accumulated  de- 
ductions shall  be  paid  to  his  estate  or  to  such  person  having  an  insurable 
interest  in  his  life  as  he  shall  have  nominated  by  written  designation  duly 
executed  and  filed  with  the  board  of  trustees. 

Optional  Benefits. 

(14)  At  the  time  of  his  retirement,  any  contributor  may  elect  to  re- 
ceive his  benefits  in  a  retirement  allowance  payable  througout  life,  or  he 
may  on  retirement  elect  to  receive  the  actuarial  equivalent  at  that  time 
of  his  annuity,  his  pension  or  his  retirement  allowance  in  a  lesser  annuity, 
or  a  lesser  pension,  or  a.  lesser  retirement  allowance,  payable  throughout 
life  with  the  provision  that : 

Option  i.  If  he  dies  before  he  has  received  in  payments  the  present 
value  of  his  annuity,  his  pension  or  his  retirement  allowance  as  it  was 
at  the  time  of  his  retirement,  the  balance  shall  be  paid  to  his  legal  repre- 
sentatives or  to  such  person  having  an  insurable  interest  in  his  life  as  he 
shall  nominate  by  written  designation  duly  acknowledged  and  filed  with 
the  board  of  trustees. 

Option  2.  Upon  his  death,  his  annuity,  his  pension  or  his  retirement 
allowance  shall  be  continued  throughout  the  life  of  and  paid  to  such  person 
having  an  insurable  interest  in  his  life  as  he  shall  nominate  by  written 
designation  duly  acknowledged  and  filed  with  the  board  of  trustees  at  the 
time  of  his  retirement. 

Option  3.  Upon  his  death,  one-half  of  his  annuity,  his  pension  or  his 
retirement  allowance  shall  be  continued  throughout  the  life  of  and  paid 
to  such  person  having  an  insurable  interest  in  his  life  as  he  shall  nominate 
by  written  designation  duly  acknowledged  and  filed  with  the  board  of 
trustees  at  the  time  of  his  retirement. 

Option  4.  Some  other  benefit  or  benefits  shall  be  paid  either  to  the 
member  or  to  such  person  or  persons  as  he  shall  nominate,  provided 
such  other  benefit  or  benefits,  together  with  the  lesser  annuity  or  lesser 
pension  or  lesser  retirement  allowance,  shall  be  certified  by  the  actuary 
to  be  of  equivalent  actuarial  value  to  his  annuity,  his  pension  or  his  retire- 
ment allowance  and  shall  be  approved  by  the  board  of  trustees. 
Benefits  of  Teachers  Now  Retired. 

(15)  All  pensions  payable  prior  to  the  month  of  September,  nineteen 
hundred  and  nineteen,  by  the  State  under  the  provisions  of  chapter  268, 
P.  L.   1914,  shall,  beginning  with  said  month,  be  paid  from  the  pension 
fund   created   by  this   article   and   all   such   pensions   as   are  below   four 
hundred  dollars  shall  be  increased  to  and  be  paid  at  the  rate  of  four 
hundred  dollars. 

(16)  Should  the  Teachers'  Retirement  Fund  by  reason  of  insolvency  or 
liquidation  cease  to  pay  in  full  the  annuities  granted  and  therefore  paid 
by  said  fund,  there  shall  be  paid  out  of  the  pension  fund  created  by  this 
article  to  persons  who  shall  have  been  annuitants  of  said  Teachers'  Retire- 
ment Fund   from   a   date  prior   to  the   fir.st   day  of   September,  nineteen 
hundred  and  nineteen,   such   part  or   all   of   such  annuities   as   the   said 
Teachers'    Retirement   Fund    shall   have    ceased   to    pay;    provided,   that 
neither  all  nor  any  part  of  the  amount  of  any  reduction  in  the  annuity 
therefore  payable  by  the  said  Teachers'  Retirement  Fund  shall  be  paid 

400 


APPENDICES 

out  of  the  said  pension  fund,  unless  there  is  in.  effect  a  corresponding  and 
proportionate  reduction  by  the  said  Teachers'  Retirement  Fund  in  the 
annuity  of,  and  payment  thereof  to,  each  and  every  person  retired  by 
the  Retirement  Fund ;  provided,  further,  that  the  board  of  trustees  shall 
be  the  sole  judge  as  to  whether  the  amount  of  any  allowance  which 
would  thereby  become  payable  out  of  the  pension  fund  corresponds  to  the 
amount  of  a  reduction  by  the  Teachers'  Retirement  Fund  in  the  allowance 
of  the  same  person  due  to  the  insolvency  or  liquidation  of  said  fund. 

ACTUARIAL  BASIS 

252.  (i)  Immediately  after  the  establishment  of  the  retirement  system, 
the  actuary  of  the  board  of  trustees  shall  make  such  investigation  of  the 
mortality  service  and  compensation  experience  of  the  teachers  of  the 
State  of  New  Jersey  as  he  shall  recommend,  and  the  board  of  trustees 
shall  authorize,  for  the  purpose  of  determining  the  proper  tables  for  the 
purposes  of  the  system.  On  the  basis  of  such  investigation  and  recom- 
mendation the  board  of  trustees  shall  adopt  such  tables  and  certify  such 
rates  as  are  required  in  paragraphs  (a),  (b),  and  (c)  of  sub-section  (2) 
of  this  section.  On  the  basis  of  such  tables  as  the  board  of  trustees  shall 
adopt,  the  actuary,  as  soon  as  practicable,  shall  make  a  valuation  of  the 
assets  and  liabilities  of  the  funds  created  by  this  article. 

(2)  In  the  years  nineteen  hundred  twenty-one  and  nineteen  hundred 
and  twenty-four,  and  once  in  every  five-year  period  thereafter,  the  said 
actuary  shall  make  an  actuarial  investiagtion  into  the  mortality,  service 
and  compensation  or  salary  experience  of  the  members  and  beneficiaries  of 
the  retirement  system,  and  shall  make  a  valuation  of  the  assets  and  liabili- 
ties of  the  various  funds  thereof,  and  upon  the  basis  of  such  investigation 
and  valuation  the  board  of  trustees  shall : 

(a)  adopt  for  the  retirement  system  such  mortality,  service  and  other 
tables  as  shall  be  deemed  necessary; 

(b)  certify  the  rates  of  deduction  from  compensation  computed  to  be 
necessary  to  pay  the  annuities  authorized   under  the  provisions   of  this 
article ;    and 

(c)  certify  the   rates   of   contribution,   expressed   as   a   proportion   of 
the  compensation  of  members  at  various  ages,  which  shall  be  made  to  the 
pension  accumulation   fund. 

FUNDS  CREATED,  CONTRIBUTIONS  THERETO  AND  PAYMENTS  THEREFROM 

2S3-     (i)     The  funds  created  are:   (a)   the  annuity  savings  fund;    (b) 
the  annuity  reserve  fund;  (c)  the  pension  fund;  (d)  the  pension  accumula- 
tion fund;  (e)  the  pension  reserve  fund;  (f)  the  expense  fund. 
Funds  Derived  from  Members'   Contributions. 

(2)  The  annuity  savings   fund   shall  be  the   fund  in  which   shall  be 
accumulated    deductions    from   the   compensation   of   contributors. 

(3)  Upon  the  basis  of  such  tables  as  the  board  of  trustees  shall  adopt, 
and  regular  interest,  the  actuary  of  the  board  of  trustees  shall  determine 
for  each  contributor  the  proportion  of  compensation,  which  when  deducted 
from  each  payment  of  his  prospective  earnable  compensation  prior  to  his 
eligibility  for  service  retirement  and  accumulated  at  regular  interest  until 
his  attainment  of  the  age   of   sixty-two    (62)    shall  be  computed  to  be 
sufficient  to  provide  at  that  time  an  annuity  equal  to  the  pension  then 
allowable    under    the    provisions    of    this    article    for    service    rendered 
during  his  membership,  and  in  case  the  said  member  is  a  new-entrant 
for  such  prior  service  as  he  both  claimed  and  was  allowed.    The  pro- 

4OI 


portion  of  compensation  shall  be  computed  to  remain  constant  until  the 
member  attains  the  age  of  sixty-two  (62)  years.  The  proportion  com- 
puted for  a  contributor  entering  at  the  age  of  sixty-one  (61)  shall  be 
applied  to  any  contributor  who  has  attained  a  greater  age  at  the  time 
of  entrance  into  the  retirement  system. 

(4)  The  board  of  trustees  shall  certify  to  each  employer  and  the  said 
employer  shall  deduct  from  the  compensation  of  each  member  on  each 
and  every  payroll  for  each  and  every  payroll  period  subsequent  to  the  date 
upon   which  such  certification  becomes  effective,  the  per  centum   of  his 
earnable  compensation  so  computed.    But  the  board  of  trustees  shall  not 
certify,  nor  shall  any  employer  make,  any  deduction  for  annuity  purposes 
from  the  compensation  of  a  member  who  has  attained  the  age  of  sixty-two 
(62)    and  completed  thirty-five    (35)    years   of   service,   if   such  member 
elects  not  to  contribute. 

(5)  In  determining  the  amount  earnable  by  a  contributor  in  a  pay- 
roll period,  the  board  of  trustees  may  consider  the  rate  of  compensation 
payable  to  such  member  on  the  first  day  of  the  payroll  period  as  continu- 
ing throughout  such  payroll   period,   and   it   may  omit  deductions    from 
compensation  for  any  period  less  than   full   payroll  period  if  a  teacher 
was   not   a   contributor   on   the   first  day   of   the   payroll   period,   and  to 
facilitate  the  making  of  deductions  it  may  modify  the  deduction  required 
of  any  contributor  by  such  an  amount  as  shall  not  exceed  one-tenth  of  one 
per  centum  of  the  compensation  upon  the  basis  of  which  said  deduction 
is  to  be  made. 

(6)  In  lieu  of  any  part  of  the  deduction  from  compensation  herein- 
before required,  any  new-entrant  may  deposit  in  the  annuity  savings  fund 
by  a  single  payment  such  an  amount  as  will  be  sufficient  to  permit  him 
to  contribute  the  rate  of  contributions  applicable  to  an  earlier  entrance 
age.     In  addition  to  the  deductions  from  compensation  hereinbefore  re- 
quired  any   contributor  may   redeposit   in   a   single   payment  an   amount 
equal  to  the  total  amount  which  he  withdrew  therefrom  as  provided  in 
this  article,  or  he  may  deposit  therein  by  a  single  payment  an  amount 
computed  to  be  sufficient  together  with  the  retirement  allowance  other- 
wise provided,  to  provide  for  him  a.  total  retirement  allowance  of  one- 
half  of  his  final   salary  at  the  age  of   sixty-two    (62).     Such  additional 
amounts  so  deposited  shall  become  a  part  of  his  accumulated  deductions. 

(7)  The  accumulated  deductions  of  a  contributor  withdrawn,  as  pro- 
vided in  this  article,  shall  be  paid  out  of  the  annuity  savings  fund.     In 
the  case  of  a  withdrawal,  an  amount  equivalent  to  the  difference  between 
the  amount  of  the  accumulated  deductions  calculated  at  regular  interest 
and    the    amount    of    the    accumulated    deductions    calculated   by   use    of 
interest  at  the  rate   of  three  and  one-half  per  centum  per  annum  com- 
pounded annually  shall  be  transferred  to  the  expense  fund. 

(8)  The  annuity  reserve  fund  shall  be  the  fund  from  which  shall  be 
paid  all  annuities  and  all  benefits  in  lieu  of  annuities.     Upon  the  retire- 
ment of  a  contributor  his   accumulated   deductions   shall  be  transferred 
from  the  annuity  savings  fund  to  said  annuity  reserve  fund 

FUNDS     DERIVED     FROM     CONTRIBUTIONS     FROM     SCHOOL     APPORTIONMENT    FUND 

PENSION    FUND 

(9)  The  pension  fund  shall  be  the  fund  in  which  shall  be  accumulated 
the  reserves  for  the  payment  of  pensions  to  present-entrants ;  into  which 
the   moneys   necessary   for  the   payment   of   all   other  pensions    with   the 
exception  of  those  payable  to  new-entrants  shall  be  paid ;  and  from  which 
all  pensions  with  the  exception  of  those  payable  to  new-entrants  shall  be 
paid. 

402 


APPENDICES 

(10)  The   actuary,   after   making   the    first    valuation    required,   shall 
determine  the  present  value  of   the   liability  on  account  of  pensions  to 
present-entrants  then  retired  or  to  be  retired.    He  shall  then  determine 
the    percentage    of    the    total    compensation    paid    to    all    members    for 
service   during   the   preceding  school   year,   which   is   equivalent  to   one- 
twenty-fifth   of   the  said   liability. 

(11)  The    State   Comptroller   shall  pay  annually,   beginning   with   the 
year  nineteen  hundred  and  twenty,  from  the  school  apportionment  fund 
into  the  pension   fund  the  amount  as  certified  to  him  by  the  board  of 
trustees,  which  shall  be  equal  to  the  per  centum,  determined  in  accordance 
with   this   subsection   and   the   subsection   immediately   preceding,   of    the 
total  compensation  paid  to  all  members  for  service  during  the  preceding 
school  year. 

Each  annual  payment  shall  be  at  least  three  per  centum  greater  than 
the  preceding  annual  payment.  In  every  case,  the  amount  shall  be  suf- 
ficient, when  combined  with  that  in  the  fund  to  provide  the  pensions 
payable  out  of  this  fund  during  the  year  then  current,  and  shall  be 
equal  to  at  least  one-twenty-fifth  of  the  liability  on  account  of  present- 
entrants  now  retired  or  to  be  retired.  The  State  Comptroller  shall  con- 
tinue such  payments  until  the  accumulated  reserve  in  the  pension  fund 
equals  the  present  value,  as  computed  by  the  actuary  and  approved  by  the 
board  of  trustees,  of  all  pension  payments  thereafter  payable  on  account 
of  present-entrants,  then  retired  or  to  be  retired  on  a  pension  as 
provided  in  this  article. 

(12)  To  pay  the  pensions  provided  under  subsections   (15)   and   (16) 
of  section  two  hundred  and  fifty-one,  the  board  of  trustees  shall  annually 
prepare    an    estimate    of    the    amounts    required    therefor   and   the    State 
Comptroller    shall    pay    from    the    school    apportionment    fund    into    the 
pension  fund  for  this  purpose  the  amounts  required. 

(13)  All  moneys  appropriated  for  the  payment  of  pensions  to  public- 
school  teachers  under  chapter  268,  P.  L.  1914,  for  the  fiscal  year  beginning 
July,  nineteen  hundred  and  nineteen,  less  the  amount  disbursed  for  said 
pensions  during  the  months  of  July  and  August,  shall,  on  the  first  day  of 
September,    one   thousand    nine   hundred    and    nineteen,   be   paid   by   the 
State    Treasurer    into    the   pension    tund. 

PENSION   ACCUMULATION  FUND 

(14)  The    pension    accumulation    fund    shall    be    the    fund    in    which 
shall  be  accumulated   the  reserves   necessary  to   pay  all  pensions   to   be 
granted  to  new-entrants. 

(15)  In  the  month  of  July,  nineteen  hundred  and  twenty,  for  a  period 
covering  the  ten  months  next  preceding,  and  annually  thereafter,  covering 
the  year  next  preceding  the  State  Comptroller  shall  pay  from  the  school 
apportionment  fund  into  the  pension  accumulation  fund  on  account  of  all 
new-entrants  who  were  contributors  for  one  or  more  months  of  such  period 
immediately  preceding,  such  amount  as  shall  be  certified  by  the  board  of 
trustees  as  necessary  to  provide  thereby  during  their  prospective  active 
service  the  pension   reserve  required  at  the  time  of  retirement   for  the 
disability   or   superannuation   pension   herein   provided.     The   amount 
for  each  teacher  included  in  the  aggregate  amount  so  certified  shall 
be  computed  to  bear  a  ratio  to  the  salary  earnable  by  such  teacher 
during  the  period  for  which  the  amount  is  certified,  which  shall  remain 
constant    during    his    entire    period    of    prospective    active    service    and 
shall  be  based  on  such  mortality  and  other  tables  as  shall  be  adopted 
by  the  board  of  trustees  and  on  regular  interest. 

403 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

PENSION  RESERVE  FUND 

(16)  The  pension  reserve  fund  shall  be  the  fund  from  which  shall  be 
paid  all  pensions,  and  all  benefits,  in  lieu  of  pensions,  granted  to  new- 
entrants.     Upon  the  retirement  of  a  new-entrant  an  amount  equal  to  his 
pension  reserve  fund  shall  be  transferred  to  said  fund  from  the  pension 
accumulation  fund. 

(17)  Should  any  disability  pension  payable   from   said  fund  be  can- 
celled, the  .pension  reserve  thereon  shall  thereupon  be  transferred   from 
the  pension  reserve  fund  to  the  pension  accumulation  fund.     Should  the 
pension  of  a  disability  beneficiary  be  reduced  as  a  result  of  an  increase 
in  his  earning  capacity,  the  amount  of  the  annual  reduction  in  his  pension 
shall   be   paid   annually  into   the   pension   accumulation    fund    during  the 
period  of   such  reduction. 

EXPENSE  FUND 

(18)  The  expense   fund  shall  be  the   fund   from  which  the  expense 
of  the  administration  of  the  retirement  system  shall  be  paid  exclusive  of 
amounts  payable  as  retirement  allowances  and  as  other  benefits  provided 
herein. 

fig)  The  board  of  trustees  shall  certify  annually  to  the  State  Comp- 
troller the  amount  required  to  defray  such  expense  in  the  ensuing  fiscal 
year  after  making  allowance  for  the  estimated  amounts  to  be  received 
by  the  expense  fund  from  the  annuity  savings  fund,  and  the  State  Comp- 
troller shall  pay  from  the  school  apportionment  fund  into  the  expense  fund 
the  amount  so  determined. 


COLLECTION    OF   CONTRIBUTIONS 

Collection  of  Members'  Contributions : 

254.  (i)  Each  employer  shall  keep  such  records,  and  from  time  to 
time,  furnish  such  information  as  the  board  of  trustees  in  the  discharge  of 
its  duties  may  require. 

(2)  Upon  the  employment  of  any  teacher  to  whom  this  article  may 
apply,  he  shall  be  informed  by  his  employer  of  his  duties  and  obligations 
in  connection  with  the  retirement  system  as  a  condition  of  his  employ- 
ment.   Every  teacher  accepting  employment  shall  be  deemed  to  consent 
and  agree  to  any  deductions  from  his  compensation  required  herein  and  to 
all  other  provisions  of  this  article. 

(3)  Notwithstanding  any  other  law,  rule   or  regulation  affecting  the 
salary,    pay,    compensation,   other    perquisites    or   tenure   of    any   teacher 
to  whom  this  article  applies,  or  shall  apply,  and  notwithstanding  that  the 
minimum  salary,  pay,  compensation  or  other  perquisites,  provided  by  law 
for  any  such  teacher  shall  be  reduced  thereby,  payment  less  said  deductions 
shall  be  a  full  and  complete  discharge  and  acquittance  of  all  claims  and 
demands   whatsoever  for  service  rendered  by   such  member  during  the 
period  covered  by  such  payment. 

(4)  When  a  teacher  is  employed  by  a  school  district,  the  custodian 
of  school  moneys  and,  in  other  cases,  his  employer  shall  notify  the  board 
of  trustees  within  ten  days  after  the  appointment  of  a  teacher  of  such 
appointment  and  shall  deduct  the  proportion  of  salary  as  certified  by  the 
board  of   trustees   from   the   salary  of  such   teacher   as   herein   directed, 
and  shall  certify  to  the  Treasurer  of  the  State  of  New  Jersey  on  account 
of  each  and  every  payroll  a  statement  as  voucher  for  the  amounts  deducted 

404 


APPENDICES 

for  annuity  purposes  at  the  rate  certified  by  the  board  of  trustees,  shall 
send  a  duplicate  of  such  statement  to  the  board  of  trustees,  and  shall  trans- 
mit or  credit  to  the  said  State  Treasurer  the  amount  thereof.  Any  failure 
on  the  part  of  the  custodian  of  school  moneys  of  any  school  district 
to  comply  with  the  provisions  of  the  subsection  shall  constitute  a  default, 
and  the  State  Board  of  Education  may  withhold  school  moneys  from 
such  school  district  until  such  default  is  made  good. 

(5)  The  State  Treasurer  shall  credit  the  annuity  savings  fund  with 
each  amount  transmitted  or  credited  as  provided  in  the  subsection  im- 
mediately  preceding,    and    he    shall    transmit    to    the    board    of    trustees 
monthly,  or  at  such  less  frequent  intervals  as  the  board  of  trustees  shall 
designate,  a  detailed  statement  of  all  amounts  so  paid  in  and  credited  by 
him  to  the  annuity  savings  fund. 

The  board  of  trustees  shall  cause  each  of  such  amounts  so  deducted 
to  be  credited  in  the  annuity  savings  fund  to  an  individual  account  of  the 
member  from  whose  compensation  the  deduction  was  made. 

Collection   of   Employers'   Contributions: 

(6)  Upon  the  basis  of  each  actuarial  determination  and  appraisal  pro- 
vided herein,  the  board  of  trustees  shall  annually  prepare  and  certify  to 
the  State  Comptroller  an  estimate  of  the  amounts  necessary  to  be  paid 
from  school  apportionment  fund  to  the  various  funds  for  ensuing  fiscal  year. 

(7)  The  State  Comptroller,  prior  to  the  apportionment,  on  or  before 
the  first  day  of  February,  among  the  several  counties  of  the  State  of  the 
funds  devoted  to  the  maintenance  and  support  of  a  thorough  and  efficient 
system  of  free  public  schools,  as  provided  in  and  by  an  act  entitled  "A 
supplement  to  an  act  entitled  'An  act  to  establish  a  thorough  and  efficient 
system  of  free  public  schools,  and  to  provide  for  the  maintenance,  support 
and  management  thereof,'  approved  October  nineteenth,  one  thousand  nine 
hundred  and  three,"  approved  April  twentieth,  one  thousand  nine  hundred 
and  six,  shall  deduct  from  the  moneys  so  to  be  apportioned,  in  addition 
to    any   other   sums   to   be    deducted    from    said    fund   by   virtue   of   the 
provisions  contained  in  any  law  of  this  State,  the  amount  certified  to  him 
by  the  board  of  trustees  as  necessary  to  make  the  payments  to  the  various 
funds  of  the  retirement  system  from  the  School  Apportionment  Fund  as 
provided  herein  for  the  then  ensuing  school  year,  and  he  shall  pay  such 
amounts  into  the  various   funds   of  the  retirement   system,  on  the  first 
day  of  July  following  the  certification. 

(8)  If  at  any  time  no  deductions  shall  have  been  made  as  required 
by  the  subsection  immediately  preceding,  or  if  at  any  time  the  amount 
deducted  shall  not  be  sufficient  to  make  the  payments  provided  for  herein, 
such  payments  shall  be  provided  for  by  the  Comptroller  of  the  Treasury 
in  making  the  then  next  deductions  as  required  herein,  and  shall  be  in  ad- 
dition to  the  sum  certified  to  him  by  the  board  of  trustees  as  necessary  for 
the  payments  for  the  then  ensuing  school  year. 

(9)  To  meet  the  expense  of  establishing  and  administering  the  retire- 
ment system  created  herein  there  is  hereby  appropriated  from  the  school 
apportionment  fund  the  sum  of  twenty-five  thousand  dollars  ($25,000). 

*  (10)  To  meet  the  cost  of  pensions  granted  under  chapter  two  hundred 
and  sixty-eight,  Laws  of  nineteen  hundred  and  fourteen,  assumed  herein, 
and  the  cost  of  such  annuities  granted  by  the  Teachers'  Ratirement  Fund 
which  are  assumed  herein,  and  shall  be  payable  on  or  after  the  first 
day  of  July,  nineteen  hundred  and  nineteen,  there  is  hereby  appropriated 
from  the  school  apportionment  fund  the  sum  of  two  hundred  and  fifty 
thousand  dollars.  The  State  Comptroller  shall  deduct  such  sum  from  the 

405 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

school  apportionment  fund  in  the  same  manner  as  provided  by  chapter 
sixty-five  of  the  Laws  of  nineteen  hundred  and  nine,  and  shall  pay  said  sum 
into  the  pension  fund  created  herein. 

ADMINISTRATION 

Board  of  Trustees. 

255.  (i)  The  general  administration  and  responsibility  for  the  proper 
operation  of  the  retirement  system  and  for  making  effective  the  pro- 
visions of  this  article  is  hereby  vested  in  a  board  of  trustees,  which  shall 
be  organized  immediately  after  the  passage  of  this  act.  The  said  board 
shall  from  time  to  time  establish  rules  and  regulations  for  the  administra- 
tion and  transaction  of  its  business  and  for  the  control  of  the  funds 
created  herein,  and  shall  perform  such  other  functions  as  are  required 
for  the  execution  of  the  provisions  of  the  retirement  system. 

(2)  The  membership   of  the  board   of   trustees   shall  consist  of  the 
following : 

(a)  The  Commissioner  of  Education  of  the  State  of  New  Jersey;  Pro- 
vided, that  the  commissioner  may  appoint  the  assistant  commissioner,  who 
acts  in  his  place  during  his  absence,  to  serve  in  his  stead. 

(b)  The  Treasurer  of  the  State  of  New  Jersey. 

(c)  One   trustee   appointed   by   the   Governor   of   the   State   of   New 
Jersey  to  serve  until  the  first  day  of  September,  nineteen  hundred  and 
twenty-one.    His  successor  shall  be  appointed  each  for  a  term  of  three 
years. 

(d)  Three  trustees   elected  from  among  the  members  of  the  retire- 
ment  system,   one   to   serve   for   one  year,   one   to   serve   for   two   years 
and  one  to  serve  for  three  years  from  the  first  day  of  November  follow- 
ing their  election.     One  of  such  trustees  shall  be  a  resident  of  and  em- 
ployed in  either  the  county  of  Hudson,  Essex  or  Bergen ;  one  a  resident 
of  and  employed  in  either  the  county  of  Passaic,  Sussex,  Warren,  Morris, 
Union,  Hunterdon,  Somerset,  Middlesex,  Mercer  or  Monmouth ;  and  the 
third  a  resident  of  and  employed  in  either  the  county  of  Ocean,  Burling- 
ton, Camden,  Gloucester,  Salem,  Cumberland,  Atlantic  or  Cape  May.     Their 
successors  shall  be  elected   for  a  term  of  three  years  from  among  the 
members  of  the  retirement  system. 

(e)  One  trustee,  not  a  teacher  nor  an  officer  of  the  State,  elected  by 
the  other  trustees,  to  serve  until  the  first  day  of  January,  nineteen  hundred 
and  twenty-one,  whose  successor  shall  be  elected  in  the  same  manner  for 
a  term  of  three  years. 

A  vacancy  occurring  in  the  board  of  trustees  shall  be  filled  for  the  un- 
expired  term  in  the  same  manner  as  herein  provided  for  regular  appoint- 
ment or  election. 

(3)  Until  the  election  of  the  three  trustees  from  among  the  members 
of    the    retirement    system    the    Commissioner    of    Education,    the    State 
Treasurer  and  the  trustee  appointed  by  the  Governor,  are  empowered  to 
perform  the  duties  of  the  board  of  trustees.     All  rules  and  regulations 
adopted  by  them  shall  be  subject  to  change  by  the  entire  board  when  the 
membership  of  such  board  shall  be  completely  filled. 

(4)  An  annual  convention  of  the  retirement  system  shall  be  held  at  the 
State  House  in  Trenton,  at  twelve  o'clock,  noon,  on  the  second  Saturday 
in    October   each   year,   beginning   with   the   year    nineteen   hundred    and 
nineteen,  for  the  purpose  of  electing  members  of  the  board   of  trustees 
of    the   retirement    system,    and    receiving   the    report   of    said   board   of 
trustees  and  for  the  transaction  of  such  other  business  as  may  properly 
be  within  its  jurisdiction.     Such  convention  shall  be  composed  of  delegates 
from   each  county  in  the   State,   selected  as   hereinafter   provided.     Said 
convention  shall  be  called  to  order  by  a  member  of  the  board  of  trustees, 

406 


APPENDICES 

designated  by  said  board,  and  shall  organize  by  the  election  of  a  chairman 
and  a  secretary.  Each  county  shall  be  entitled  to  be  represented  in  such 
convention  by  one  delegate  for  each  two  hundred  members  of  the  retire- 
ment system  in  said  county  and  one  delegate  for  any  fraction  over  one 
hundred,  provided,  that  each  county  shall  be  entitled  to  at  least  one 
delegate.  Said  delegate  shall  be  elected  by  the  vote  of  a  majority  of  the 
members  of  the  retirement  system  voting  at  a  meeting  held  for  the  purpose 
of  electing  such  delegates.  Said  meeting  for  the  election  of  delegates 
shall  be  held  at  such  convenient  place  as  shall  be  selected  by  the  county 
superintendent  of  schools.  Notice  of  the  time  and  place  of  said  meeting 
shall  be  issued  by  said  county  superintendent  at  least  ten  days  before  the 
date  of  said  meeting.  Said  meeting  shall  organize  by  the  election  of  a 
chairman  and  secretary.  Said  secretary  shall,  within  five  days  after  said 
meeting,  forward  to  the  board  of  trustees  of  the  retirement  system  a  cer- 
tificate containing  the  names  and  addresses  of  the  delegates  elected  to 
the  annual  convention,  and  shall  furnish  the  delegates  elected  with  a 
certificate  of  their  election.  In  case  of  a  vacancy  in  the  delegation  from 
any  county,  the  remaining  delegates  from  such  county  may  fill  such 
vacancy  by  appointing  a  member  in  said  county,  who  shall  possess  the 
qualifications  hereinbefore  prescribed  for  delegates  to  such  convention. 
A  majority  of  all  of  the  delegates  entitled  to  seats  in  said  convention  shall 
constitute  a  quorum  for  the  transaction  of  business. 
Administrative  Staff  and  Procedure. 

(5)  Each  member  of  the  board  of  trustees  shall,  upon  his  appoint- 
ment or  election,  take  an  oath  of  office  that,  so  far  as  it  devolves  upon 
him,   he  will  diligently  and  honestly  administer  the  affairs   of   the   said 
board,  and  that  he  will  not  knowingly  violate  or  willingly  permit  to  be 
violated  any  of  the  provisions  of  law  applicable  to  the  retirement  system. 
Such  oath  shall  be  subscribed  to  by  the  member  making  it,  and  certified 
by  the  officer  before  whom  it  is  taken,  and  shall  be  immediately  filed  in 
the  office  of  the  Secretary  of   State. 

(6)  Each  trustees  shall  be  entitled  to  one  vote  in  the  board.     Four 
votes   shall  be   necessary  for  a  decision  by  the  trustees  at  the  meeting 
of  said  board.     The  board  of  trustees  shall  keep  a  record  of  all  of  its 
proceedings,  which  record  shall  be  open  to  public  inspection. 

(7)  The  board  of  trustees  shall  elect  from  its  membership  a  chairman, 
shall  engage  such  actuarial  and  other  technical  service,  and  shall  ap- 
point such  employees  as  may  be  necessary  to  transact  the  business 
of  the  retirement  system.     The  actuary  shall  be  the  technical  advisor 
of  the  board  of  trustees  on  matters  regarding  the  operation  of  the 
funds  created  by  the  provisions  of  this  article,  and  shall  perform  such 
other    duties    as    are    required    in    connection   therewith.      The    Attorney- 
General  of  the   State  of  New  Jersey  shall  be   the   legal  advisor  of 
the  board  of  trustees. 

(8)  The  actuary  of  the  board  shall  recommend  and  the  board  of 
trustees  shall  keep  in  convenient  form  such  data  as  shall  be  necessary 
for  actuarial  valuation  of  the  various  funds  of  the  retirement  system. 

(9)  The  board  of  trustees  shall  publish  annually  a  report  showing 
a  valuation  of  the  assets  and  liabilities  of  the  funds,  certifying  as  to 
the  accumulated  cash  and  securities  of  the   funds  and  giving  an  ac- 
count of  the  operation  of  the  system.     The  said  board  shall  submit 
said  report  to  the  Governor  and  shall  furnish  copies   thereof  to  the 
office   of   the    State    Department    of    Education,    the    State   Treasurer 
and  to  each  employer  for  the  use  of  the  members  and  the  public. 

(10)  The  members  of  the  board   of  trustees   shall   serve   without 
compensation,   but   shall   be   reimbursed   from   the   expense    fund    for 
any  necessary  expenditures.     No  teacher  shall   surfer   loss   of  salary 

407 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

or  wages  through  serving  on  the  board  of  trustees.  Compensation 
for  all  other  personal  service  to  the  retirement  system  shall  be 
fixed  by  the  board. 

(n)  The  board  of  trustees  shall  establish  itself  in  an  office  for 
the  administration  of  the  retirement  system  in  such  city  as  it  shall 
consider  most  suitable  for  the  transaction  of  its  business. 

Management   of   Funds. 

(12)  The  board  of  trustees  shall  be  the  trustees  of  the  several  funds 
created  by  this  article  and  shall  have  full  power  to  invest  the  same, 
subject  to  all  the  terms,  conditions,  limitations  and  restrictions  imposed  by 
law  upon  investment  of  sinking  funds  in  the  making  and  disposing  of 
their  investments;  and,  subject  to  like  terms,  conditions,  limitations 
and  restrictions,  said  trustees  shall  have  full  power  to  hold,  purchase, 
sell,  assign,  transfer  or  dispose  of  any  of  the  securities  and  invest- 
ments in  which  any  of  the  funds  created  herein  shall  have  been  in- 
vested, as  well  as  of  the  proceeds  of  said  investments  and  any  moneys 
belonging   to   said    funds. 

(13)  The  board  of  trustees  shall  annually  allow  regular  interest 
on  the  mean  amount  for  the  preceding  year  in  each  of  the  funds,  with 
the  exception  of  the  expense  fund.     The  amount  so  allowed  shall  be 
due  and  payable  to  said  funds,  and  shall  be  annually  credited  thereto 
by  the  board  of  trustees,  from  the  interest  and  other  earnings  on  the 
moneys  of  the  retirement  system.     Any  additional  amount  required  to 
meet   the    interest   on   the    funds   of  the   retirement   system    shall   be 
included  in  the  amount  certified  to  the   State   Comptroller  as  necessary 
to  make  the  payments  to  the  various  funds  of  the  retirement  system 
from  the  school  apportionment  fund  for  the  ensuing  school  year. 

(14)  The  Treasurer  of  the  State  of  New  Jersey  shall  be  the  cus- 
todian of  the  several  funds.     All  payments  from  said  funds  shall  be 
made   by  him   only  upon  voucher   signed  by  the  chairman  and  counter- 
signed by  such  other  person  as  may  be  designated  by  the  board  of 
trustees. 

(15)  For  the  purpose  of  meeting  disbursements  for  pensions,  annuities, 
and    other  payments   there   may   be    kept   an    available   fund   not   ex- 
ceeding ten  per  centum  of  the  total  amount  in  the  several  funds  of 
the  retirement  system,  on  deposit  in  any  bank  in  this  State,  organized  under 
the  laws  thereof,  or  under  the  laws  of  the  United  States  or  in  any  trust 
company  incorporated  by  any  law  of  this  State;  provided,  that  the  sum 
deposited  in  any  one  bank  or  trust  company  shall  not  exceed  twenty-five 
per   centum   of   the   paid-up   capital   and    surplus   of    said   bank   or   trust 
company. 

(16)  Except  as  herein  provided,  no  trustee  and  no  employee  of  the 
board  shall  have  any  interest,  direct  or  indirect,  in  the  gains  or  profits 
of  any  investment  made  by  the  board  of  trustees,  nor  as  such  directly  or 
indirectly  receive  any  pay  or  emolument  for  his  services.    And  no  trustee 
or  employee  of  the  board  shall,  directly  or  indirectly,  for  himself  or  as  an 
agent  in  any  manner  use  the  same,  except  to  make  such  current  and 
necessary  payments  as  are  authorized  by  the  board  of  trustees;  nor 
shall   any   trustee    or   employee    of    the   board   become    an    endorser   or 
surety  or  become  in  any  manner  an  obliger  for  moneys  loaned  by  or 
borrowed  of  the  board  of  trustees. 

OTHER  PROVISIONS 

State    Supervision. 

256.  (i)  The  various  funds  of  the  retirement  system  shall  be  sub- 
ject to  the  supervision  of  the  State  Department  of  Insurance. 

408 


APPENDICES 

Exemption  from  Taxation. 

(2)  The  right  of  a  teacher  to  a  pension,  an  annuity,  or  a  retire- 
ment allowance,  to  the  return  of  contributions,  any  benefit  or  right 
accrued  or  accruing  to  any  person  under  the  provisions  of  this  article, 
and  the  moneys  in  the  various  funds  created  hereunder,  are  hereby 
exempt  from  any  State  or  municipal  tax,  and  shall  not  be  subject  to 
execution  garnishment,  attachment  or  any  other  process  whatsoever, 
and  shall  be  unassignable  except  as  in  this  act  specifically  provided. 
Protection  Against  Fraud. 

(3)  Any  person  who  shall  knowingly  make  any  false  statement,  or 
shall  falsify  or  permit  to  be  falsified  any  record  or  records  of  this 
retirement  system  in  any  attempt  to  defraud  such  system  as  a  result 
of  such  act,  shall  be  guilty  of  a  misdemeanor,  and  shall  be  punishable 
therefor   under   the   laws   of   the   State   of   New  Jersey.     Should   any 
change  or  error  in  records  result  in  any  employee  or  beneficiary  re- 
ceiving from  the  retirement  system  more  or  less  than  he  would  have 
been   entitled  to  receive  had  the  records  been  correct,  then,   on  the 
discovery  of  any  such  error,  the  board  of  trustees  shall  correct  such 
error,  and,  so  far  as  practicable,  shall  adjust  the  payments  in  such 
a  manner  that  the  actuarial  equivalent  of  the  benefit  to  which  he  was 
correctly  entitled  shall  be  paid. 

2.  All  acts  and  parts  of  acts  inconsistent  with  the  provisions  of  this 
act  or  any  portion  of  the  act  to  which  this  act  is  an  amendment,  which 
are  inconsistent  with  the  provisions  of  this  act  are  hereby  repealed.     If  any 
section,  clause  or  part  of  this  act  shall  be  declared  unconstitutional  by  the 
decision  of  any  court  of  competent  jurisdiction,  such  decision  shall  not 
invalidate  or  destroy  the  force  or  purpose  of  the  remainder  thereof. 

3.  This  act  shall  take  effect  immediately. 
Approved  April  10,  1919. 

Laws  of  1919,  Chapter  81.  An  Act  to  amend  "An  act  to  amend  an 
act  entitled  'An  act  to  establish  a  thorough  and  efficient  system  of  free 
public  schools,  and  to  provide  for  the  maintenance,  support  and 
management  thereof,'  approved  October  nineteenth,  one  thousand  nine 
hundred  and  three,"  approved  May  seventh,  one  thousand  nine  hun- 
dred and  seven. 

BE  IT  ENACTED  by  the  Senate  and  General  Assembly  for  the  State  of  New 
Jersey : 

I.  Section  two  hundred  and  twenty-one  of  Article  XXV  of  the  act 
to  which  this  act  is  an  amendment  is  hereby  amended  to  read  as  follows : 

221.  I.  Any  member  of  the  now  existing  Teachers'  Retirement  Fund 
shall  be  released  from  membership  in  said  fund  and  from  any  obligation 
for  the  payment  of  dues  or  deduction  from  salary  for  the  support  of  said 
fund,  and  the  board  or  body  by  which  he  or  she  is  employed  shall  cease 
to  deduct  the  percentages  as  heretofore  deducted  from  his  or  her  salary; 
provided,  such  member  shall,  at  any  time  after  the  passage  of  this  act, 
give  written  notice  duly  witnessed  declaring  his  or  her  withdrawal  from 
membership  in  the  Teachers'  Retirement  Fund,  and  waiving  all  his  or 
her  rights,  benefits  and  privileges  thereunder  in  triplicate,  and  in  sub- 
stantially the  following  form : 

NOTICE    OF   WITHDRAWAL 

To  the  Board  of  Trustees  of  the  Teachers'  Retirement  Fund. 

This  shall  serve  as  a  notice  that  I  hereby  withdraw  from  membership 
in  the  Teachers'  Retirement  Fund,  and  that  I  hereby  waive  all  my 
rights,  benefits  and  privileges  in  and  to  said  fund  by  virtue  of  my  mem- 
bership in  and  contributions  to  the  Teachers'  Retirement  Fund. 

409 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


Date    Signed 

Witnessed  by  Address  

Address   School 

One  copy  of  such  notice  shall  be  delivered  to  the  board  of  trustees  of  the 
Teachers'  Retirement  Fund,  at  the  office  of  the  Teachers'  Retirement  Fund, 
and  one  copy  to  the  board  of  trustees  of  the  Teachers'  Pension  and 
Annuity  Fund,  and  the  other  copy  of  the  board  or  body  by  which  he  or 
she  is  employed.  In  case  such  delivery  is  not  made  in  person  or  by  agent, 
it  shall  be  deemed  to  have  been  made  when  said  notice  is  mailed  properly 
addressed  to  the  party  to  which  such  delivery  should  be  made  postpaid 
and  by  registered  mail.  Such  notice  shall  become  effective  and  member- 
ship in  the  Teachers'  Retirement  Fund  shall  cease  on  the  first  day  of  the 
month  next  following  such  delivery  of  such  notice. 

II.  No  person  appointed  as  a  teacher  in  this  State  after  the  passage 
of  this  act  shall  be  required  to  become  a  member  of  the  Teachers'  Retire- 
ment Fund,  but  such  person  may  do  so  if  he  or  she  so  elects. 

2.     This  act  shall  take  effect  immediately. 

Approved  April   10,   1919. 

(f)     OHIO 

An  Act  to  provide  a  state-wide  retirement  system  for  teachers  in 
schools  supported  wholly  or  in  part  by  public  funds. 

BE  IT  ENACTED  by  the  General  Assembly  of  the  State  of  Ohio : 

SECTION  i.  That  the  following  words  and  phrases  as  used  in  this  act, 
unless  a  different  meaning  is  plainly  required  by  the  context,  shall  have  the 
following  meanings : 

"Retirement  System"  shall  mean  the  "State  Teachers'  Retirement  Sys- 
tem" provided  for  in  this  act. 

"Retirement  Board"  shall  mean  the  board  provided  for  in  this  act  to 
administer  said  Retirement  System. 

"Employer"  shall  mean  the  board  of  education,  school  district  or  other 
agency  within  the  State  of  Ohio  by  which  a  teacher  is  employed  or  paid. 

"Teacher"  shall  mean  any  teacher  or  other  person,  regularly  employed 
in  the  public  schools  of  the  State  of  Ohio,  who  is  required  by  law  to  have 
a  teachers'  certificate ;  and  any  teacher  in  any  school  or  college  or  other 
institution  wholly  controlled  and  managed,  and  wholly  or  partly  supported 
by  the  state  or  any  subdivision  thereof,  the  board  of  trustees  or  other 
managing  body  of  which  shall  accept  the  requirements  and  obligations  of 
this  act. 

"Present-teachers"  shall  mean  any  person  who  was  a  teacher,  as  de- 
fined by  this  act,  before  the  first  day  of  September,  nineteen  hundred  and 
twenty ;  whose  membership  in  the  retirement  system  has  been  continuous ; 
and, 

(a)  who  became  a  member  on  said  date,  or  on  the  date  of  his  first 
service  as  a  teacher  after  said  date  and  within  one  year  after  his   last 
day  of  service  previous  to  said  first  day  of  September,  nineteen  hundred 
and   twenty;   or, 

(b)  who  was  a  teacher  of  a  school  or  college  or  other  institution  on  said 
date,  or  on  a  subsequent  date  within  one  year  after  his  last  day  of  service 
as  such  teacher  previous  to  said  first  day  of  September,  nineteen  hundred 
and  twenty,  and  who  continued  thereafter  to  be  a  teacher  thereof  until  he, 
with   the   teaching  staff   of   such   school   or   college   or  other   institution, 
became  a  member  of  the  retirement  system  as  provided  in  this  act;  or, 

(c)  who  was  a  member  of  a  local  district  pension  system  on  said  date,  or 
on  the   date  of  his   first  eligibility  to   such   membership   after  said   date 

4IO 


APPENDICES 

and  within  one  year  after  his  last  day  of  membership  therein  previous  to 
said  first  day  of  September,  nineteen  hundred  and  twenty,  and  who 
continued  thereafter  to  be  a  member  until  he,  with  the  membership 
of  such  local  district  pension  system,  became  a  member  of  the  retirement 
system. 

"New-entrant"  shall  mean  any  teacher  who  is  a  member  except  a  present- 
teacher. 

"Prior-service"  shall  mean  all  service  as  a  teacher,  as  defined  by  this 
act,  rendered  before  the  first  day  of  September,  nineteen  hundred  and 
twenty,  by  a  present-teacher  and  similar  service  in  another  state  credit  for 
which  was  procured  by  a  present-teacher  as  provided  by  this  act. 

"Total-service"  shall  mean  all  service  of  a  member  of  the  retirement 
system  since  last  becoming  a  member  and,  in  addition  thereto,  all  his 
prior-service  computed  as  provided  in  this  act. 

"Member"  shall  mean  any  person  included  in  the  membership  of  the 
retirement  system  as  provided  in  this  act. 

"Contributor"  shall  mean  any  person  who  has  an  account  in  the  teachers' 
savings  fund. 

"Beneficiary"  shall  mean  any  person  in  receipt  of  a  retirement  allowance 
or  other  benefit  provided  by  this  act. 

"Regular  interest"  shall  mean  interest  at  four  per  centum  per  annum, 
compounded  annually. 

"Accumulated  contributions"  shall  mean  the  sum  of  all  the  amounts  de- 
ducted from  the  compensation  of  a  member  and  credited  to  his  individual 
account  in  the  teachers'  savings  fund  together  with  regular  interest 
thereon. 

"Final  average  salary"  shall  mean  the  average  annual  compensation,  not 
exceeding  two  thousand  dollars,  earnable  as  a  teacher  by  a  member  during 
the  ten  years  immediately  preceding  his  date  of  retirement. 

"Annuity"  shall  mean  payments  for  life  derived  from  contributions 
made  by  a  contributor  and  paid  from  the  annuity  and  pension  reserve 
fund  as  provided  in  this  act.  All  annuities  shall  be  paid  in  twelve  equal 
monthly  installments. 

"Pension"  shall  mean  annual  payments  for  life  derived  from  appropria- 
tions made  by  an  employer  and  paid  from  the  employers'  accumulation 
fund  or  the  annuity  and  pension  reserve  fund  as  provided  in  this  act.  All 
pensions  shall  be  paid  in  twelve  equal  monthly  installments. 

"Retirement  allowance"  shall  mean  the  pension  plus  the  annuity. 

"Annuity  reserve"  shall  mean  the  present  value,  computed  upon  the 
basis  of  such  mortality  tables  as  shall  be  adopted  by  the  retirement  board 
with  regular  interest,  of  all  payments  to  be  made  on  account  of  any 
annuity  or  benefit  in  lieu  of  any  annuity,  granted  to  a  member  under 
the  provisions  of  this  act. 

"Pension  reserve"  shall  mean  the  present  value  computed  upon  the 
basis  of  such  mortality  tables  as  shall  be  adopted  by  the  retirement 
board  with  regular  interest,  of  all  payments  to  be  made  on  account 
of  any  pension,  or  benefit  in  lieu  of  any  pension,  granted  to  a  member 
under  the  provisions  of  this  act. 

The  year  for  the  administration  of  this  act  shall  mean  the  school  year 
and  shall  begin  September  first  and  end  with  August  thirty-first  next 
following. 

"Local  district  pension  system"  shall  mean  any  school  teachers'  pension 
fund  created  in  any  school  district  of  the  State  of  Ohio  in  accordance  with 
the  laws  of  such  state  prior  to  the  first  day  of  September,  nineteen  hundred 
and  twenty. 

SECTION  2.  A  state  teachers'  retirement  system  is  hereby  established 
for  the  teachers  of  the  public  schools  of  the  State  of  Ohio  which  shall 

411 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

include  the  several  funds  created  and  placed  under  the  management  of  a 
"Retirement  Board"  for  the  payment  of  retirement  allowances  and  other 
benefits  under  the  provisions  of  this  act.  The  retirement  board  herein 
created  shall  have  the  right  to  sue  and  be  sued,  plead  and  be  impleaded, 
contract  and  be  contracted  with  and  do  all  things  necessary  to  carry  out 
the  provisions  of  this  act  and  by  such  name  all  of  its  business  shall  be 
transacted,  all  of  its  funds  invested,  all  warrants  for  money  drawn  and 
payments  made,  and  all  of  its  cash  and  securities  and  other  property  shall 
be  held. 

SECTION  3.  The  general  administration  and  the  management  of  the 
state  teachers'  retirement  system  and  the  making  effective  the  provisions 
of  this  act  are  hereby  vested  in  the  retirement  board  which  shall  have 
authority  to  make  all  necessary  rules  and  regulations,  not  inconsistent  with 
the  provisions  of  this  act  to  carry  into  effect  the  provisions  thereof. 

SECTION  4.  The  retirement  board  shall  consist  of  five  members  as 
follows:  (a)  the  superintendent  of  public  instruction;  (b)  the  auditor  of 
state;  (c)  the  attorney  general;  and  (d)  two  other  members  known  as 
teacher  members,  who  shall  be  members  of  the  retirement  system  and 
who  shall  be  elected  by  ballot  by  the  members  of  the  retirement  system. 

SECTION  5.  The  first  election  of  teacher  members  of  the  retirement  board 
shall  be  conducted  by  and  under  the  supervision  of  the  superintendent  of 
public  instruction  within  sixty  days  after  the  first  day  of  September 
next  succeeding  the  passage  of  this  act.  At  the  first  election  each  teacher 
shall  be  deemed  to  be  a  member  of  the  retirement  system  and  shall 
have  the  right  to  vote  for  two  candidates  for  membership  in  the  retire- 
ment board,  provided,  that  any  teacher  in  a  local  district  pension  system 
who  exercises  such  right  to  vote  shall  be  deemed  to  have  petitioned  for 
a  merger  with  the  state  teachers'  retirement  system  as  provided  in  this  act 
and  his  name  shall  be  deemed  to  have  been  duly  signed  to  any  such 
petition  subsequently  circulated  in  such  local  district  pension  system.  The 
candidate  receiving  the  highest  number  of  votes  shall  be  elected  to  serve 
for  a  period  ending  on  the  second^  thirty-first  of  August  following  the 
election;  the  candidate  receiving  the  second  highest  number  of  votes 
shall  be  elected  to  serve  for  a  period  ending  on  the  thirty-first  of  August 
following  the  election. 

SECTION  6.  Annually  after  the  first  election  a  member  of  the  retire- 
ment system  shall  be  elected  by  ballot  to  membership  in  the  retirement 
board  to  serve  for  a  term  of  two  years  beginning  on  the  first  day  of 
September  following  the  election.  Vacancies  occurring  in  the  terms  of 
teacher  members  of  the  board  shall  be  filled  by  the  remaining  members 
of  the  board  by  election  for  the  unexpired  terms.  Teacher  members  of 
the  retirement  board  who  fail  to  attend  the  meetings  of  the  board  for 
four  months  or  longer,  without  being  excused,  shall  be  considered  as 
having  resigned  and  successors  shall  be  elected  for  their  unexpired  terms. 

SECTION  7.  All  elections  for  members  of  the  retirement  board  after 
the  first  election  shall  be  held  on  the  first  Monday  of  May  of  each  year 
under  the  direction  of  the  retirement  board.  Any  member  of  the  retire- 
ment system  shall  be  eligible  for  election  as  a  member  of  the  retirement 
board  and  the  name  of  any  member  who  shall  be  nominated  by  a  petition 
signed  by  at  least  one  hundred  members  of  the  retirement  system  shall  be 
placed  upon  the  ballots  by  the  retirement  board  as  a  regular  candidate. 
Other  names  of  eligible  candidates  may  at  any  election  be  substituted 
for  the  regular  candidates  by  writing  such  names  upon  the  ballots.  The 
candidates  receiving  the  highest  number  of  votes  for  any  term  as  member 
of  the  retirement  board  shall  be  elected  a  member  of  the  retirement 
board  for  such  term. 

SECTION  8.    Until  the  first  election  shall  have  been  held  and  the  teacher- 

412 


APPENDICES 

•members   elected   thereat   duly  installed,   the   ex   officio   members    of   the 
retirement  board  shall   constitute  an  acting  retirement  board. 

SECTION  9.  Each  member  of  the  retirement  board  created  by  this  act 
upon  appointment  or  election  shall  take  an  oath  of  office  that  he  will 
support  the  constitution  of  the  United  States,  the  constitution  of  the  State 
of  Ohio,  and  that  he  will  diligently  and  honestly  administer  the  affairs 
of  the  said  board  and  that  he  will  not  knowingly  violate  or  wilfully 
permit  to  be  violated  any  of  the  provisions  of  law  applicable  to  this  act. 
Such  oath  shall  be  subscribed  to  by  the  member  making  it,  and  certified 
by  the  officer  before  whom  it  is  taken,  and  shall  be  immediately  filed 
in  the  office  of  the  secretary  of  state. 

SECTION  10.  A  majority  of  the  members  of  the  retirement  board  shall 
constitute  a  quorum  for  the  transaction  of  any  business. 

SECTION  n.  The  members  of  the  retirement  board  shall  serve  without 
compensation,  but  they  shall  be  reimbursed  from  the  expense  fund  for  all 
actual  necessary  expenses  and  for  any  loss  of  salary  or  wages  they  may 
suffer  through  serving  on  the  retirement  board. 

SECTION  12.  The  retirement  board  shall  elect  from  its  membership  a 
chairman. 

SECTION  13.  The  treasurer  of  the  state  of  Ohio  shall  be  the  custodian 
of  the  funds  of  the  retirement  system,  and  all  disbursements  therefrom 
shall  be  paid  by  him  only  upon  vouchers  duly  authorized  by  the  retirement 
board  and  bearing  the  signatures  of  said  board ;  or,  such  vouchers  may 
bear  the  fac-simile  signatures  of  the  board  members  printed  thereon  and 
the  signatures  of  the  president  and  secretary  of  said  board. 

The  treasurer  of  state  shall  give  a  separate  and  additional  bond  in 
such  amount  as  may  be  fixed  by  the  governor,  but  not  less  than  the  amount 
of  money  in  all  of  the  funds  of  the  retirement  system  at  the  time  such 
bond  is  fixed  and  with  sureties  to  the  approval  of  the  governor,  conditioned 
for  the  faithful  performance  of  the  duties  of  such  treasurer  as  custodian 
of  the  funds  of  the  retirement  system  provided  for  herein.  Such  bond 
shall  be  deposited  with  the  secretary  of  state  and  kept  in  his  office. 
The  governor  may  from  time  to  time  require  the  treasurer  of  state  to 
give  other  and  additional  bonds,  as  the  funds  of  said  retirement  system  in- 
crease, in  such  amounts  and  at  such  times  as  may  be  fixed  by  the 
governor  which  additional  bonds  shall  be  conditioned  and  filed  as  is 
provided  for  the  original  bond  of  the  state  treasurer  covering  the  funds 
of  the  retirement  system. 

The  treasurer  of  state  is  hereby  authorized  and  directed  to  deposit 
any  portion  of  the  funds  of  the  retirement  system  not  needed  for  im- 
mediate use  in  the  same  manner  and  subject  to  all  the  provisions  of  law 
with  respect  to  the  deposit  of  state  funds  by  such  .treasurer,  and  all 
interest  earned  by  such  portion  of  the  said  retirement  funds  as  may  be 
deposited  by  the  state  treasurer  in  pursuance  of  authority  herewith  given 
shall  be  collected  by  him  and  placed  to  the  credit  of  such  fund  or  funds. 

SECTION  14.  The  attorney  general  of  the  state  of  Ohio  shall  be  the  legal 
advisor  of  the  retirement  board. 

SECTION  15.  The  retirement  board  shall  have  power  to  employ  a 
secretary  and  to  secure  the  service  of  such  technical  and  administrative  em- 
ployees as  may  be  necessary  for  the  transaction  of  the  business  of  the 
retirement  system.  The  compensation  of  all  persons  engaged  by  the 
retirement  board  and  all  other  expenses  of  the  board  necessary  for  the 
proper  operation  of  the  retirement  system  shall  be  paid  at  such  rates 
and  in  such  amounts  as  the  retirement  board  shall  approve.  The  retire- 
ment board  shall  receive  and  act  upon  all  applications  for  retirement  under 
the  provisions  of  this  act  and  shall  provide  for  the  payment  of  all  retire- 
ment allowances  and  other  benefits  and  shall  make  such  other  necessary 

413 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

expenditures  as  are  required  or  authorized  by  the  provisions  of  this 
act. 

SECTION  16.  The  members  of  the  retirement  board  shall  be  the 
trustees  of  the  several  funds  created  by  this  act  and  said  board  shall 
have  full  power  to  invest  same  in  bonds  of  the  United  States,  the  state 
of  Ohio  or  of  any  county,  city,  village  or  school  district  of  the  state  of 
Ohio  at  current  market  prices  for  such  bonds ;  provided  that  such  pur- 
chase be  authorized  by  a  resolution  adopted  by  the  board ;  and  all  such 
bonds  so  purchased,  forthwith,  shall  be  placed  in  the  hands  of  the  treasurer 
of  state,  who  is  hereby  designated  as  custodian  thereof,  and  it  shall  be 
his  duty  to  collect  the  interest  thereon  as  the  same  becomes  due  and 
payable  and  also  the  principal  thereof  and  place  the  same  when  so  col- 
lected into  the  retirement  funds  herein  provided  for.  The  treasurer  of 
state  shall  honor  and  pay  all  vouchers  drawn  on  the  retirement  funds 
for  the  payment  of  such  bonds  upon  delivery  of  said  bonds  to  him  when 
there  is  attached  to  such  vouchers  a  certified  copy  of  such  resolution 
of  the  board  authorizing  the  purchase  of  such  bonds;  and  the  board 
may  sell  any  of  said  bonds  upon  like  resolution,  and  the  proceeds  thereof 
shall  be  paid  by  the  purchaser  to  the  treasurer  of  state  upon  delivery 
•  to  him  of  said  bonds  by  the  treasurer. 

SECTION  17.  All  interest  earned  upon  the  entire  amount  of  money  be- 
longing to  said  retirement  system  shall  be  divided  among  the  various 
funds  thereof  proportionately,  except  that  no  interest  shall  be  credited 
to  the  guarantee  and  expense  funds  herein  provided  for. 

SECTION  18.  Except  as  herein  provided,  no  trustee  and  no  employee 
of  the  retirement  board  shall  have  any  interest  direct  or  indirect  in  the 
gains  or  profits  of  any  investment  made  by  the  board  nor  as  such  directly 
or  indirectly  receive  any  pay  or  emolument  for  his  services.  And  no 
trustee  or  employee  of  the  said  board  directly  or  indirectly,  for  himself 
or  as  an  agent  or  partner  of  others,  shall  borrow  any  of  its  funds  or 
deposits  or  in  any  manner  use  the  same  except  to  make  such  current 
and  necessary  payments  as  are  authorized  by  the  board ;  nor  shall  any 
member  or  employee  of  said  board  become  an  endorser  or  surety  or  be- 
come in  any  manner  an  obliger  for  moneys  loaned  by  or  borrowed  of 
the  board. 

SECTION  19.  The  retirement  board  shall  provide  for  the  maintenance 
of  an  individual  account  with  each  member  showing  the  amount  of  the 
member's  contributions  and  the  interest  accumulations  thereon.  It  shall 
collect  and  keep  in  convenient  form  such  data  as  shall  be  necessary  for 
the  preparation  of  the  required  mortality  and  service  table,  and  for  the 
compilation  of  such  other  information  as  shall  be  required  for  the 
actuarial  valuation  of  the  assets  and  liabilities  of  the  various  funds  cre- 
ated by  this  act.  Updn  the  basis  of  the  mortality  and  service  experience 
of  the  members  and  beneficiaries  of  the  system,  the  retirement  board  from 
time  to  time  shall  adopt  the  tables  to  be  used  for  valuation  purposes  and 
for  determining  the  amount  of  annuities  to  be  allowed  on  the  basis 
of  the  contributions  of  members. 

SECTION  20.  At  such  times  as  the  retirement  board  may  deem  it 
necessary  and  at  least  once  within  the  first  three  years  of  the  operation 
of  this  act,  and  once  in  each  quinquennial  period  thereafter  the  retire- 
ment board  shall  have  prepared  by  a  competent  actuary  familiar  with  re- 
tirement systems,  a  report  showing  a  complete  valuation  of  the  present  and 
prospective  assets  and  liabilities  of  the  various  funds  created  by  this  act 
with  the  exception  of  the  guarantee  fund  and  the  expense  fund.  The 
actuary  shall  make  an  investigation  of  the  mortality  and  service  experience 
of  the  members  of  the  system  and  shall  report  fully  upon  the  condition  of 
the  retirement  system  together  with  such  recommendations  as  he  shall  deem 

414 


APPENDICES 

advisable  for  the  information  of  the  retirement  board  in  the  proper 
operation  of  the  retirement  system. 

SECTION  21.  The  custodian  shall  furnish  annually  to  the  retirement 
board  a  sworn  statement  of  the  amount  of  the  funds  in  his  custody  belong- 
ing to  the  retirement  system.  The  records  of  the  retirement  board  shall 
be  open  to  public  inspection  and  any  member  of  the  retirement  system 
shall  be  furnished  with  a  statement  of  the  amount  to  the  credit  of  his 
individual  account  upon  written  request  by  such  member,  provided  that 
the  retirement  board  shall  not  be  required  to  answer  more  than  one  such 
request  of  a  member  in  any  one  year. 

SECTION  22.  The  membership  of  the  retirement  system  shall  consist 
of  the  following: 

(a)  All  teachers  in  service  on  the  first  day  of  September,  nineteen  hun- 
dred and   twenty,  except   teachers   who   shall  have   filed   with   their   em- 
ployer  a   statement   in    writing   requesting    exemption    from    membership 
or  teachers  who  are  excluded  by  the  provisions  of  this  act. 

(b)  All  teachers   who   became  teachers  or  who  were   reappointed  as 
teachers  after  the  first  day  of  September,  nineteen  hundred  and  twenty, 
except  teachers  who  are  excluded  by  the  provisions  of  this  act. 

(c)  The  teachers  in  any  school  or  college  or  other  institution  supported 
in  whole  or  in  part  by  the  state  or  any  subdivision  thereof  and  wholly 
controlled  or  managed  by  the  state  or  any  subdivision  thereof  shall  be- 
come members  on  the  same  terms  and  conditions  as  the  teachers  in  the 
public  schools,  provided  that  the  board  of  trustees  or  other  managing  body 
of  such  school,  college  or  other  institution,  if  such  institution  is  now  in 
existence  or  if  in  existence  on  said  date,  shall  agree  by  formal  resolution 
adopted  before   September  first,  nineteen  hundred  twenty-one,   to  accept 
all  the  requirements  and  obligations  imposed  by  this  act  upon  employers  of 
members.     Any  institution  which  comes  into  existence  as  such  thereafter 
shall  have  ninety  days  in  which  to  accept  said  requirements  and  obliga- 
tions.   A  certified  copy  of  said  resolution  shall  be  filed  with  the  retirement 
board.     When    such    resolution    shall    have    been    adopted    and    a    copy 
of   it   filed   with   the   retirement  board,   it   shall   not   later   be   subject   to 
rescindment   or   abrogation.     Service   in   such    schools,   colleges   or   other 
institutions  shall  be  then  considered  in  every  way  the  same  as  service  in 
the  public  schools  so  far  as  the  purposes  of  this  act  are  concerned,  and 

(d)  All  other  teachers  who  become  contributors  under  the  provisions 
of  this  act. 

SECTION  23.  Members  of  a  local  district  pension  system  maintained 
under  the  laws  of  the  state  of  Ohio  from  appropriations  or  contributions 
made  wholly  or  in  part  by  any  employer  and  existing  at  the  time  this  bill 
becomes  a  law  are  hereby  excluded  from  membership  in  this  retirement 
system.  But  should  a  majority  of  all  the  teachers  participating  in  any 
such  local  district  pension  system  apply  for  membership  in  the  retirement 
system  created  by  this  act  by  a  petition  July  signed  and  verified,  approved 
by  their  employer,  and  filed  with  the  retirement  board,  all  the  teachers 
included  in  the  membership  of  such  local  district  pension  system  shall  be- 
come members  of  the  retirement  system  created  by  this  act  at  such  time 
within  three  months  after  the  filing  of  such  petition  and  the  compliance 
with  the  other  provisions  of  this  act  relative  to  the  dissolution  and  dis- 
continuance of  such  local  district  pension  system  as  the  retirement  board 
shall  designate. 

SECTION  24.  The  retirement  board,  notwithstanding  the  foregoing  pro- 
visions, may  deny  the  right  to  become  members  to  any  class  of  teachers, 
whose  compensation  is  only  partly  paid  by  the  state,  or  who  are  not  serving 
on  a  per  annum  basis,  or  who  are  on  a  temporary  basis,  or  who  are  not  re- 
quired to  have  a  teacher's  certificate,  and  it  may  also  in  its  discretion,  make 

415 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

optional  with  teachers  in  any  such  class  their  individual  entrance  into 
membership. 

SECTION  25.  The  membership  of  any  person  in  the  retirement  system 
shall  cease  if  he  withdraw  his  accumulated  deductions  or  if  he  retire  on 
a  pension  as  provided  in  this  act,  or  if  he  die,  or  if,  in  any  four-year 
period  after  he  last  became  a  member,  he  shall  render  less  than  two  years 
of  service  as  a  teacher. 

SECTION  26.  Each  teacher,  upon  becoming  a  member,  shall  file  a 
detailed  statement  of  all  his  previous  service  as  a  teacher  and  shall  fur- 
nish such  other  facts  as  the  retirement  board  may  require  for  the  proper 
operation  of  the  retirement  system. 

SECTION  27.  To  the  extent  to  which  it  is  used  in  determining  the  liability 
of  any  fund  created  by  this  act,  the  retirement  board  shall  verify  such 
statement  by  the  best  evidence  it  shall  be  able  to  obtain.  If  official  records 
are  not  available  as  to  the  length  of  service,  salary  or  other  information 
required  for  the  administration  of  this  act,  the  board  is  hereby  empowered 
to  use  its  discretion  as  to  the  evidence  to  be  accepted. 

SECTION  28.  The  retirement  board  shall  credit  a  year  of  service  to  any 
teacher  who  is  employed  in  a  school  district  for  the  number  of  months 
the  regular  day  school  of  such  district  were  or  shall  be  in  session  in  said 
district  within  any  year  beginning  on  or  about  the  first  day  of  September 
and  ending  on  or  about  the  thirty-first  day  of  August  following,  and 
shall  fix  and  determine  by  appropriate  rules  and  regulations  how  much 
credit  shall  be  given  for  parts  thereof,  but  in  computing  such  service, 
or  in  computing  final  compensation,  it  shall  credit  no  time  during  which 
a  member  was  absent  without  pay,  and  it  shall  credit  not  more  than  one 
year  for  all  service  rendered  in  any  school  year. 

SECTION  29.  Subject  to  the  above  restrictions,  and  to  such  other  rules 
and  regulations  as  the  retirement  board  shall  adopt,  said  board  shall  issue 
to  each  present-teacher  a  certificate  certifying  to  the  aggregate  length  of 
all  his  prior-service  as  a  teacher  as  defined  in  this  act. 

SECTION  30.  Any  present-teacher  or  new  entrant,  in  addition  to  service 
as  a  teacher  as  defined  in  this  act,  may  claim  credit  for  similar  service 
as  a  teacher  in  the  public  day  schools  of  another  state  of  the  United 
States  or  of  any  territory  or  possession  of  the  United  States  and  such 
service  shall  be  treated  by  the  retirement  board  and  included  in  his 
prior-service  certificates  as  if  it  were  service  in  the  state  of  Ohio  pro- 
vided the  teacher  shall  pay  into  the  employer's  accumulation  fund  an 
amount  equal  to  the  additional  liability  assumed  by  such  fund  on  account 
of  the  crediting  of  such  years  of  service  rendered  outside  of  the  state.  The 
retirement  board  shall  have  final  authority  to  determine  and  fix  the 
amount  that  any  teacher  shall  pay  on  account  of  such  service  outside 
of  the  state  in  the  case  of  any  present-teacher  or  new  entrant,  who 
desires  to  claim  outside  service  and  make  such  payment. 

SECTION  31.  So  long  as  membership  continues,  a  prior-service  certificate 
shall  be  final  and  conclusive  for  retirement  purposes  as  to  such  service, 
unless  modified  by  the  retirement  board  upon  application  made  by  the 
member  or  upon  its  own  initiative  within  one  year  after  the  date  of  its 
issuance  or  modification,  or  in  case  a  mistake  is  found  therein  within  one 
year  of  the  time  such  mistake  is  so  found. 

SECTION  32.  When  a  present-teacher  ceases  to  be  a  member  his  prior- 
service  certificate  shall  be  void  and  not  renewable. 

SECTION  33.  At  retirement  the  total  service  credited  a  teacher  shall 
consist  of  all  his  service  as  teacher  since  he  last  became  a  member  and, 
if  he  has  a  prior-service  certificate  which  is  in  full  force  and  effect, 
all  service  certified  on  such  prior-service  certificate. 

SECTION  34.    Any  teacher,  except  a  new-entrant  with  less  than  five  years 

416 


APPENDICES 

of  service,  who  has  attained  sixty  years  of  age  may  retire,  if  a  member, 
by  filing  with  the  retirement  board  an  application  for  retirement.  The 
filing  of  such  application  shall  retire  such  member  as  of  the  end  of  the 
school  year  then  current.  At  the  end  of  the  school  year  in  which  they 
become  members,  the  retirement  board  shall  retire  all  teachers  who  were 
over  seventy  years  of  age  at  the  time  they  become  members  and  shall 
automatically  retire  all  other  teachers  who  are  members  at  the  end  of  the 
school  year  in  which  age  seventy  is  attained. 

SECTION  35.  Upon  superannuation  retirement,  a  teacher  shall  be  granted 
a  retirement  allowance  consisting  of : 

(a)  An  annuity  having  a  reserve  equal  to  the  amount  of  the  teacher's 
accumulated  contributions  at  that  time ;  and 

(b)  A  pension  of  equivalent  amount;  and       ' 

(c)  An  additional  pension,  if  such  teacher  is  a  present-teacher,  equal 
to  one  and  one-third  per  centum  of  his  average  final   salary  multiplied 
by  the  number  of  years  of  service  certified  in  his  prior-service  certificate 

SECTION  36.  Any  teacher  who  has  completed  thirty-six  years  of  total 
service  may  retire,  if  a  member,  on  a  commuted  superannuation  allowance 
by  filing  with  the  retirement  board  an  application  for  such  form  of 
allowance.  The  filing  of  such  application  shall  retire  such  member  as  of 
the  end  of  the  school  year  then  current.  Upon  retirement  on  a  com- 
muted superannuation  allowance,  a  teacher  shall  be  granted  a  retirement 
allowance  consisting  of : 

(a)  an  annuity  having  a  reserve  equal  to  the  amount  of  the  teacher's 
accumulated   contributions   at   that   time;    and 

(b)  a   pension,   having  a   reserve   equal   to   the   amount   of   the   total 
liability    of    the    employers'    accumulation    fund    for    the    payment    upon 
superannuation  retirement  of  a  pension  equal  to  the  annuity  which  the 
teacher's  accumulations  would  purchase  provided  such  teacher  made  no 
further  payments;   and 

(c)  an  additional  pension,  if  such  teacher  is  a  present-teacher,  having 
a   reserve   equal  to  the  amount  of   the  total   liability  of  the   employer's 
accumulation   fund  for  the  payment  of  the  pension  allowable  on  super- 
annuation retirement  by  reason  of  prior-service  as  certified  in  such  teacher's 
prior-service  certificate.     Provided,  however,  that  no  teacher  retiring  after 
thirty-six    years    of    service    shall    receive    less    than    twenty-five    dollars 
per  month  as  a  total  retirement  allowance. 

SECTION  37.  Medical  examination  of  a  member  for  disability  shall  be 
made  upon  the  application  of  the  employer  or  upon  the  application  of  the 
member  or  of  a  person  acting  in  his  behalf,  stating  that  said  member  is 
physically  or  mentally  incapacitated  for  the  performance  of  duty  and 
ought  to  be  retired,  provided  that  the  said  member  was  a  teacher  as  de- 
fined in  this  act  for  not  less  than  ten  years  preceding  his  retirement 
and  was  a  member  in  each  of  such  ten  years  which  were  subsequent  to  the 
year  nineteen  hundred  and  twenty.  If  such  medical  examination,  con- 
ducted by  a  competent  disinterested  physician,  or  physicians,  selected  by  the 
retirement  board  shows  that  the  said  member  is  physically  or  mentally 
incapacitated  for  the  performance  of  duty  and  ought  to  be  retired,  the 
examining  physician,  or  physicians,  shall  so  report  and  the  retirement 
board  shall  retire  the  said  member  for  disability  forthwith. 

SECTION  38.  Upon  disability  retirement,  a  member  shall  receive  a  re- 
tirement allowance  which  shall  consist  of : 

(a)  An  annuity  having  a  reserve  equal  to  the  amount  of  the  teacher's 
accumulated  contributions  at  that  time ;  and 

(b)  A  pension  which,  together  with  his  annuity  shall  provide  a  retire- 
ment  allowance   of   one  and   one-fifth   per   centum   of   his   final  average 
salary  multiplied  by  the  number  of  years  of  total  service,  but  not  less 

417 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

than  thirty  per  centum  of  said  final  average  salary,  with  the  exception 
that  in  no  case  shall  the  rate  per  centum  of  final  average  salary  to  which 
said  retirement  allowance  amounts  exceed  nine-tenths  of  the  rate  per 
centum  of  final  average  salary  to  which  he  probably  would  have  been 
entitled  had  retirement  been  deferred  to  the  age  of  sixty. 

SECTION  39.  A  disability  beneficiary,  notwithstanding  the  provisions  of 
this  act,  shall  be  considered  on  leave  of  absence  during  his  first  five  years 
on  the  retired  list  and  shall  retain  his  membership  in  the  retirement 
system.  Once  each  year  during  said  period,  the  retirement  board  shall 
require  any  disability  beneficiary  under  the  minimum  age  for  superannua- 
tion retirement  to  undergo  medical  examination,  said  examination  to  be 
made  at  the  place  of  residence  of  said  beneficiary  or  other  place  mutually 
agreed  upon.  Upon  completion  of  such  examination  by  an  examining 
physician,  or  physicians,  selected  by  the  retirement  board,  the  examiner 
shall  report  and  certify  to  the  board  whether  said  beneficiary  is  physically 
and  mentally  capable  of  resuming  service  similar  to  that  from  which  he  was 
retired.  If  the  retirement  board  concur  in  a  report  by  the  examining  physi- 
cian or  physicians  that  the  said  disability  beneficiary  is  capable  of  resuming 
service  similar  to  that  from  which  he  was  retired,  the  board  shall  so  certify 
to  his  last  employer  before  retirement  and  said  employer  by  the  first  day 
of  the  next  succeeding  school  year  shall  restore  said  beneficiary  to  his 
previous  position  and  salary  or  to  a  position  and  salary  similar  thereto. 
Should  any  disability  beneficiary  die  during  such  leave  of  absence  aforesaid 
his  estate  shall  be  paid  the  balance  which  remains  to  his  credit  in  the 
retirement  fund  at  his  death.  Should  a  disability  beneficiary  be  restored  to 
active  service  his  retirement  allowance  shall  cease  and  the  annuity  and  pen- 
sion reserves  on  his  allowance  at  that  time  in  the  annuity  and  pension 
reserve  fund  shall  be  transferred  from  the  annuity  and  pension  reserve 
fund  to  the  teachers'  savings  fund  and  the  employers'  accumulation  fund 
respectively.  Should  any  disability  beneficiary,  during  his  first  five  years 
on  the  retired  list  and  while  under  the  age  of  sixty,  refuse  to  submit  to  a 
medical  examination  as  required  by  this  act,  his  retirement  allowance 
shall  be  discontinued  until  his  withdrawal  of  such  refusal,  and  should 
such  refusal  continue  for  one  year,  all  his  rights  in  and  to  such  retire- 
ment allowance  shall  be  forfeited.  After  a  disability  beneficiary  has 
been  on  the  retired  list  for  a  period  of  five  years  he  shall  not  be  required  to 
submit  to  further  disability  examination. 

SECTION  40.  A  contributor  who  ceases  to  be  a  teacher  for  any  cause 
other  than  death  or  retirement,  upon  demand,  within  ten  years  after  such 
cessation  of  service,  shall  be  paid  the  accumulated  contributions  standing 
to  the  credit  of  his  individual  account  in  the  teachers'  savings  fund.  Ten 
years  after  such  cessation  of  service  if  no  previous  demand  has  been 
made,  any  accumulated  contributions  of  a  contributor  shall  be  returned  to 
him  or  to  his  legal  representatives.  If  the  contributor  or  his  legal 
representatives  can  not  then  be  found,  his  accumulated  contributions  shall 
be  forfeited  to  the  retirement  system  and  credited  to  the  guarantee  fund. 

SECTION  41.  Should  a  contributor  die  before  retirement,  his  ac- 
cumulated contributions  shall  be  paid  to  his  estate  or  to  such  person 
as  he  shall  have  nominated  by  written  designation  duly  executed  and  filed 
with  the  retirement  board.  If  no  legal  representatives  can  be  found,  his 
accumulated  contributions  shall  be  forfeited  to  the  retirement  system  and 
credited  to  the  guarantee  fund. 

SECTION  42.  Until  the  first  payment  on  account  of  any  benefit  is  made, 
the  beneficiary  may  elect  to  receive  such  benefit  in  a  retirement  allowance 
payable  throughout  life,  or  the  beneficiary  may  then  elect  to  receive  the 
actuarial  equivalent  at  that  time  of  his  annuity,  his  pension,  or  his  re- 
tirement allowance,  in  a  lesser  annuity,  or  a  lesser  pension,  or  a  lesser  re- 

418 


APPENDICES 

tirement    allowance,    payable    throughout    life    with    the    provision    that, 

Option  i — If  he  die  before  he  has  received  in  payments  the  present 
value  of  his  annuity,  his  pension,  or  his  retirement  allowance,  as  it  was 
at  the  time  of  his  retirement,  the  balance  shall  be  paid  to  his  legal  represen- 
tatives or  to  such  person,  having  an  insurable  interest  in  his  life,  as  he 
shall  nominate  by  written  designation  duly  acknowledged  and  filed  with 
the  retirement  board. 

Option  2 — Upon  his  death,  his  annuity,  his  pension,  or  his  retirement 
allowance,  shall  be  continued  throughout  the  life  of  and  paid  to  such  person 
having  an  insurable  interest  in  his  life,  as  he  shall  nominate  by  written 
designation  duly  acknowledged  and  filed  with  the  retirement  board  at  the 
time  of  his  retirement. 

Option  3 — Upon  his  death,  one-half  of  his  annuity,  his  pension,  or  his 
retirement  allowance,  shall  Tie  continued  throughout  the  life  of  such  per- 
son, having  an  insurable  interest  in  his  life  as  he  shall  nominate  by  written 
designation  duly  acknowledged  and  filed  with  the  retirement  board  at  the 
time  of  his  retirement. 

Option  4 — Some  other  benefit  or  benefits  shall  be  paid  to  the  beneficiary 
or  to  such  other  person  or  persons  as  he  shall  nominate  provided  such 
other  benefit  or  benefits,  together  with  such  lesser  annuity,  or  lesser  pension, 
or  lesser  retirement  allowance,  shall  be  certified  by  the  actuary  engaged 
by  the  retirement  board  to  be  of  equivalent  actuarial  value  to  his  annuity, 
his  pension  or  his  retirement  allowance,  and  shall  be  approved  by  the 
retirement  board. 

SECTION  43.  Each  teacher  who  is  a  member  of  the  retirement  system 
shall  contribute  four  per  centum  of  his  earnable  compensation  not  exceed- 
ing two  thousand  dollars  per  annum,  to  the  teachers'  savings  fund.  Each 
employer  shall  deduct  from  the  compensation  of  each  contributor  on  each 
and  every  payroll  of  such  contributor  for  each  and  every  payroll  period 
subsequent  to  the  date  upon  which  such  contributor  became  a  member 
an  amount  equal  to  four  per  centum  of  such  contributor's  earnable  com- 
pensation provided  that  the  amount  of  a  contributor's  earnable  com- 
pensation in  excess  of  two  thousand  dollars  per  annum  shall  not  be  con- 
sidered. In  determining  the  amount  earnable  by  a  contribution  in  a  pay- 
roll period,  the  retirement  board  and  the  employer  may  consider  the  rate 
of  compensation  payable  to  such  contributor  on  the  first  day  of  the  pay- 
roll period  as  continuing  throughout  such  payroll  period  and  deductions 
may  be  omitted  from  compensation  for  any  period  less  than  a  full  payroll 
period,  if  a  teacher  was  not  a  contributor  on  the  first  day  of  the  payroll 
period ;  and  to  facilitate  the  making  of  deductions,  the  deduction  required 
of  any  contributor  may  be  modified  in  any  payroll  period  by  an  amount  not 
exceeding  ten  cents.  The  deductions  provided  herein  shall  be  made  not- 
withstanding that  the  minimum  compensation  provided  for  by  law  for  any 
member  shall  be  reduced  thereby.  Every  member  shall  be  deemed  to  con- 
sent and  agree  to  the  deductions  made  and  provided  for  herein  and  shall 
receipt  in  full  for  his  salary  or  compensation,  and  payment  less  said  de- 
ductions shall  be  a  full  and  complete  discharge  and  acquittance  of  all 
claims  and  demands  whatsoever  for  the  services  rendered  by  such  person 
during  the  period  covered  by  such  payment.  Each  teacher  shall  pay 
with  the  first  payment  to  the  teachers'  savings  fund  each  year,  and  in  addi- 
tion thereto  a  sum  to  be  determined  by  the  retirement  board,  but  not  to 
exceed  one  dollar,  which  amount  shall  be  credited  to  the  expense  fund. 
Said  payments  for  the  expense  fund  shall  be  made  to  the  retirement 
board  in  the  same  way  as  payments  to  the  teachers'  savings  fund  shall  be 
made. 

SECTION  44.  Each  employer  of  a  teacher  who  is  a  member  of  the  re- 
tirement system  shall  pay  to  the  employers'  accumulation  fund  a  certain 

419 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

per  centum  of  the  earnable  compensation  of  each  such  teacher  to  be  known 
as  the  "normal  contribution"  and  a  further  per  centum  of  the  earnable 
compensation  of  each  such  teacher  to  be  known  as  the  "deficiency  contribu- 
tion." The  rates  per  centum  of  such  contributions  shall  be  fixed  on  the 
basis  of  the  liabilities  of  the  retirement  system  and  shall  be  certified  to  the 
employers  by  the  retirement  board  after  each  actuarial  valuation.  Until 
the  first  such  certification,  the  normal  contribution  shall  be  two  and  eight- 
tenths  per  centum  of  the  members'  salaries  and  the  deficiency  contributions 
shall  be  two  and  seventy-seven  hundredths  per  centum  of  the  members' 
salaries. 

SECTION  45.  On  the  basis  of  regular  interest  and  of  such  mortality  and 
other  tables  as  shall  be  adopted  by  the  retirement  board  the  actuary 
engaged  by  the  retirement  board  to  make  each  valuation  required  by  this 
act  during  the  period  over  which  the  deficiency  contribution  is  payable, 
immediately  after  making  such  valuation,  shall  determine  the  uniform  and 
constant  percentage  of  the  earnable  compensation  of  the  average  new  en- 
trant, who  is  a  contributor  which,  if  contributed  on  the  basis  of  the  com- 
pensation of  such  contributor  throughout  his  entire  period  of  active 
service,  would  be  sufficient  to  provide  at  the  time  of  his  retirement  the 
total  amount  of  his  pension  reserve.  The  rate  per  centum  so  determined 
shall  be  known  as  the  "Normal  contribution"  rate.  After  the  deficiency 
contribution  has  ceased  to  be  payable,  the  normal  contribution  shall  be  the 
rate  per  centum  of  the  earnable  salary  of  all  contributors  obtained  by  de- 
ducting from  the  total  liabilities  of  the  employers'  accumulation  fund  of  the 
amount  of  the  funds  in  hand  to  the  credit  of  that  fund  and  dividing 
the  remainder  by  one  per  centum  of  the  present  value  of  the  prospective 
future  salary  of  all  contributors  as  computed  on  the  basis  of  the  mortality 
and  service  tables  adopted  by  the  retirement  board  and  on  regular 
interest.  The  normal  rate  of  contribution  shall  be  determined  by  the 
actuary  after  each  valuation,  and  shall  be  certified  to  the  employers  by  the 
retirement  board  and  shall  continue  in  force  until  a  new  valuation  and 
certification. 

SECTION  46.  Immediately  succeeding  the  first  valuation,  the  actuary 
engaged  by  the  retirement  board  shall  compute  the  percentage  of  the  total 
compensation  of  all  contributors  during  the  preceding  school  year  which 
is  equivalent  to  four  per  centum  of  the  amount  of  the  total  pension  liability 
to  all  contributors  not  dischargeable  during  the  remainder  of  the  active 
service  of  all  contributors  by  the  aforesaid  normal  contribution.  The 
contribution  derived  by  deductions  at  the  rate  per  centum  so  determined 
shall  be  known  as  the  "deficiency  contribution." 

SECTION  47.  Each  employer  shall  pay  annually  into  the  employers'  ac- 
cumulation fund,  in  such  monthly  or  less  frequent  installments  as  the 
retirement  board  shall  require,  an  amount  certified  by  the  retirement 
board  which  shall  equal  the  per  centum  of  the  total  compensation,  earnable 
by  all  contributors  during  the  preceding  school  year,  which  is  the  sum 
of  the  two  rates  per  centum  hereinbefore  described  and  required  to  be 
computed,  to-wit,  the  sum  of  the  normal  contribution  rate  plus  the  de- 
ficiency contribution  rate.  The  aggregate  of  all  such  payments  by  em- 
ployers shall  be  sufficient,  when  combined  with  the  amounts  in  the  em- 
ployers' accummulation  fund,  to  provide  the  pensions  payable  out  of  the 
fund  during  the  year  then  current,  and  if  not,  the  additional  amount  so  re- 
quired shall  be  collected  by  means  of  an  increased  rate  per  centum  of  the 
deficiency  contribution  which  shall  be  certified  to  the  employers  by  the 
retirement  board  and  shall  continue  in  force  for  the  period  of  one  year. 

SECTION  48.  The  beforementioned  deficiency  contribution  contributable 
by  the  employers  shall  be  discontinued  as  soon  as  the  accumulated  reserve 
in  the  employers'  accumulation  fund  shall  equal  the  present  value,  as  ac- 

420 


APPENDICES 

tuarily  computed,  and  approved  by  the  retirement  board,  of  the  total 
liability  of  such  funds  for  the  payment  of  pensions  less  the  present  value, 
computed  on  the  basis  of  the  normal  contribution  rate  then  in  force,  of  the 
normal  contributions  to  be  received  on  account  of  teachers  who  are  at  that 
time  contributors. 

SECTION  49.  Each  employer,  before  employing  any  teacher  to  whom  this 
act  may  apply,  shall  notify  such  person  of  his  duties  and  obligations  under 
this  act  as  a  condition  of  his  employment. 

Any  such  appointment  or  reappointment  of  any  teacher  in  the  public 
day  schools  of  the  state  on  or  before  the  first  day  of  September,  nineteen 
hundred  and  twenty,  or  service  upon  indefinite  tenure  after  that  date 
shall  be  conditioned  upon  the  teacher's  acceptance  of  the  provisions  of  this 
act  as  a  part  of  the  contract. 

SECTION  50.  During  September  of  each  year,  or  at  such  other  time 
as  the  retirement  board  shall  approve,  each  employer  shall  certify  to  the 
retirement  board  the  names  of  all  teachers  to  whom  this  act  applies. 

SECTION  51.  Each  employer  shall  on  the  first  day  of  each  calendar  month, 
or  at  such  less  frequent  intervals  as  the  retirement  board  many  approve, 
notify  the  retirement  board  of  the  employment  of  new  teachers,  removals, 
withdrawals  and  changes  in  salary  of  teachers  that  shall  have  occurred  dur- 
ing the  month  preceding  or  the  period  since  the  period  covered  by  the  last 
notification. 

SECTION  52.  Each  employer  shall  cause  to  be  deducted  on  each  and 
every  payroll  of  a  contributor  or  each  and  every  payroll  period,  subse- 
quent to  the  first  day  of  September,  nineteen  hundred  and  twenty,  the 
contribution  payable  by  such  contributor  as  provided  in  this  act.  Each 
employer  shall  certify  to  the  treasurer  of  said  employer  on  each  and  every 
payroll  a  statement  as  voucher  for  the  amounts  so  deducted  and  for  the 
amount  of  the  normal  contribution  and  the  deficiency  contribution  pay- 
able by  the  employer  as  provided  in  this  act.  Each  employer  shall  send  a 
duplicate  of  such  statement  to  the  secretary  of  the  retirement  board. 

SECTION  53.  The  treasurer  of  each  employer  on  receipt  from  the 
employer  of  the  voucher  for  deductions  from  the  salaries  of  teachers  and 
for  the  contributions  of  the  employer  as  provided  in  this  act  shall 
transmit  monthly  or  at  such  times  as  the  retirement  board  shall  designate 
the  amounts  specified  in  such  voucher  to  the  secretary  of  the  retirement 
board.  The  secretary  of  the  retirement  board  after  making  a  record  of 
all  such  receipts  shall  pay  them  to  the  treasurer  of  the  State  of  Ohio 
for  use  according  to  the  provisions  of  this  act. 

SECTION  54.  Each  employer  shall  keep  such  records  and  shall  furnish 
such  information  and  assistance  to  the  retirement  board  as  it  may  require 
in  the  discharge  of  its  duties. 

SECTION  55. — Employers  who  obtain  funds  directly  by  taxation  are  hereby 
authorized  and  directed  to  levy  annually  such  additional  taxes  as  are 
required  to  provide  the  additional  funds  necessary  to  meet  the  financial 
requirements  imposed  upon  them  by  this  act,  and  said  tax  shall  be 
placed  before  and  in  preference  to  all  other  items  except  for  sinking  fund 
or  interest  purposes. 

SECTION  56.  The  funds  hereby  created  are  the  teachers'  savings  fund, 
the  employers'  accumulation  fund,  the  annuity  and  pension  reserve  fund, 
the  guarantee  fund  and  the  expense  fund. 

(a)  The  teachers'  savings  fund  shall  be  the  fund  in  which  shall  be 
accumulated  contributions  from  the  compensation  of  contributors  for  the 
purchase  of  annuities. 

The  accumulated  contributions  of  a  contributor  returned  to  him  upon 
his  withdrawal,  or  paid  to  his  estate  or  designated  beneficiary  in  the  event 
of  his  death  as  provided  in  this  act  shall  be  paid  from  the  teachers'  savings 

421 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

fund.  Any  accumulated  contributions  forfeited  by  a  failure  of  a  teacher 
or  his  estate  to  claim  the  same  as  provided  in  this  act  shall  be  trans- 
ferred from  the  teachers'  savings  fund  to  the  guarantee  fund.  The 
accumulated  contributions  of  a.  contributor  shall  be  transferred  from  the 
teachers'  savings  fund  to  the  annuity  and  pension  reserve  fund  in  the 
event  of  his  retirement. 

(b)  The  employers'  accumulation  fund  shall  be  the  fund  in  which  shall 
be   accumulated   the   reserves    for   the   payment   of   all   pensions    payable 
as  provided  by  this  act.     The  amounts  paid  by  employers  on  account  of 
their    normal    contributions    and    their    deficiency    contributions    shall    be 
credited  to  the  employers'  accumulation  fund. 

Until  the  deficiency  contribution  shall  have  been  discontinued,  upon  the 
retirement  of  a  contributor,  an  amount  equal  to  this  annuity  reserve  shall  be 
transferred  from  the  employers'  accumulation  fund  to  the  annuity  and  pen- 
sion reserve  fund  and  a  pension  equal  to  his  annuity  shall  be  paid  therefrom. 
The  remainder  of  any  pension  granted  to  him  shall  be  paid  directly  from 
the  employers'  accumulation  fund  until  the  pension  reserve  thereon  shall 
have  been  fully  accumulated  and  the  deficiency  contribution  shall  have 
been  discontinued.  Thereupon,  the  full  reserve  on  all  pensions  thereto- 
fore payable  from  the  employers'  accumulation  fund  shall  be  transferred 
from  said  fund  to  the  annuity  and  pension  reserve  fund  and  said  pensions 
shall  thereafter  be  paid  from  the  annuity  and  pension  reserve  fund.  Upon 
the  retirement  of  a  contributor  thereafter,  the  full  amount  of  his  pension 
reserve  shall  be  transferred  from  the  employers'  accumulation  fund  to  the 
annuity  and  pension  reserve  fund. 

(c)  The  annuity   and  pension   reserve   fund   shall   be  the   fund   from 
which  shall  be  paid  all  pensions  and  annuities,  or  benefits  in  lieu  thereof, 
on  account  of  which  reserves  have  been  transferred  from  the  teachers' 
savings  fund  or  the  employers'  accumulation  fund  as  provided  in  this  act. 

When  the  deficiency  contributions  have  ceased  to  be  payable,  the  full 
amount  of  the  pension  reserves  on  the  pensions  then  directly  payable  from 
the  employers'  accumulation  fund  shall  be  transferred  from  said  fund  to 
the  annuity  and  pension  reserve  fund.  The  annuity  and  pension  reserve 
fund  then  and  thereafter  shall  be  the  fund  from  which  shall  be  paid  all 
annuities  and  all  pensions,  and  all  benefits  in  lieu  thereof,  which  are  payable 
as  provided  in  this  act.  Upon  the  retirement  of  a  contributor,  then  and 
thereafter,  his  accumulated  deductions  shall  be  transferred  from  the 
teachers'  savings  fund  to  the  annuity  and  pension  reserve  fund,  and  an 
amount  equal  to  his  full  pension  reserve  shall  be  transferred  from  the 
employers'  accumulation-fund  to  the  annuity  and  pension  reserve  fund. 

Any  teacher  at  the  time  of  retirement  shall  be  permitted  to  deposit  in  the 
annuity  and  pension  reserve  fund  such  amount  in  multiples  of  one  hundred 
dollars  as  such  teacher  shall  desire  and  such  teacher  shall  receive  in  return 
therefor  an  annuity  having  a  reserve  equal  to  the  amount  deposited,  pro- 
vided, that  in  no  case  shall  a  teacher  have  the  right  to  purchase  an  annuity, 
which  together  with  the  retirement  allowance  otherwise  provided  under 
the  provisions  of  this  act  shall  exceed  such  teacher's  final  average  salary. 

(d)  A  guarantee  fund  is  hereby  created  to  facilitate  the  crediting  of 
uniform   interest   on   the   amounts   in   the  various   other   funds   with   the 
exception  of  the  expense  fund,  and  to  provide  a  contingent  fund  out  of 
which  special  requirements  of  any  of  the  other   funds  may  be  covered. 
All  income,  interest  and  dividends  derived  from  the  deposits  and  invest- 
ments authorized  by  this  act  shall  be  paid  into  the  guarantee  fund. 

The  retirement  board  is  hereby  authorized  to  accept  gifts  and  be- 
quests. Any  funds  that  may  come  into  possession  of  the  retirement 
system  in  this  manner  or  which  may  be  transferred  from  the  teachers' 
savings  fund  by  reason  of  lack  of  claimant  or  because  of  a  surplus  in  any 

422 


APPENDICES 

fund  created  by  this  act  or  any  other  moneys  whose  disposition  is  not 
otherwise  provided  for  herein  shall  be  credited  to  the  guarantee  fund. 

The  interest  allowed  by  the  retirement  board  to  each  of  the  funds  as 
provided  in  this  act  shall  be  paid  to  such  funds  from  the  guarantee  fund. 
Any  deficit  occurring  in  any  fund  which  would  be  not  automatically  covered 
by  the  payment  to  that  fund  as  otherwise  provided  by  this  act  shall  be 
met  by  payments  from  the  guarantee  fund  to  such  fund.  Should  the 
amount  in  this  fund  in  any  year  be  insufficient  to  meet  the  amounts  pay- 
able therefrom  the  amount  of  such  deficiency  with  regular  interest  added 
thereto,  shall  be  assessed  by  the  retirement  board  in  the  succeeding  years 
among  the  employers  on  the  basis  of  the  amount  of  the  normal  contribu- 
tions paid  by  them,  and  the  amounts  so  assesed  shall  be  payable  by  such 
employers  in  the  same  manner  and  out  of  the  same  funds  as  their  normal 
contributions  are  made  and  shall  be  credited  to  the  guarantee  fund. 

(e)  The  expense  fund  shall  be  the  fund  from  which  shall  be  paid 
the  expense  of  the  administration  of  this  act,  exclusive  of  amounts  pay- 
able as  retirement  allowances  and  as  other  benefits  as  provided  in  this  act. 

SECTION  57.  The  retirement  board  shall  estimate  annually  the  amount 
required  to  defray  such  expense  in  the  ensuing  year.  The  retirement 
board  shall  apportion  the  amount  of  the  expense  so  estimated  in  equal 
amounts  among  the  contributors,  provided  that  the  amount  so  apportioned 
in  any  year  shall  not  exceed  one  dollar  per  contributor.  If  the  amount 
estimated  to  be  required  to  meet  the  expenses  of  the  retirement  board  is  in 
excess  of  one  dollar  per  contributor  for  the  year,  the  amount  of  such 
excess  shall  be  paid  from  the  guarantee  fund.  If  in  the  judgment  of  the 
retirement  board,  as  evidenced  by  a  resolution  of  that  board  recorded 
in  its  minutes,  the  amount  in  the  guarantee  fund  exceeds  the  amount 
necessary  to  cover  the  ordinary  requirement  of  that  fund  for  a  period 
of  five  years  in  the  future,  the  board  may  transfer  to  the  expense  fund 
such  excess  amount  not  exceeding  the  entire  amount  required  to  cover  the 
expenses  as  estimated  for  the  year  and  the  retirement  board  may  then 
apportion  the  remaining  amount  required  for  the  expense  fund,  if  any, 
among  the  contributors  as  before  mentioned. 

Section  58.  The  sum  of  ten  thousand  dollars  is  hereby  appropriated 
from  the  moneys  in  the  general  revenue  fund  of  the  State  of  Ohio, 
not  otherwise  appropriated,  for  the  expense  of  establishing,  organizing  and 
starting  the  operations  of  the  retirement  system  and  of  establishing  an 
office  therefor.  This  sum  shall  be  credited  to  the  expense  fund  and  ex- 
pended only  on  order  of  the  retirement  board. 

SECTION  59.  If  a  local  district  pension  system  votes  to  merge  with  the 
retirement  system  as  provided  in  this  act,  the  retirement  board  created  by 
this  act  shall  employ  an  actuary  to  value  the  assets  and  liabilities  which 
will  be  taken  over  by  the  retirement  system  hereby  created  in  the  event 
of  such  merger.  The  actuary  so  employed  shall  be  an  actuary  also 
approved  by  the  employer  in  whose  district  the  local  district  pension  system 
is  operated,  and  the  expense  of  the  valuation  shall  be  paid  by  such  em- 
ployer. The  actuary  shall  compute  the  present  value  of  the  liabilities  on 
account  of  teachers  in  service  in  the  local  district  pension  system  and  on 
account  of  pensioners  on  the  rolls  of  such  local  district  pension  system. 
He  shall  also  compute  the  present  value  of  the  prospective  amount  to 
be  received  by  reason  of  the  payment  of  the  normal  contributions  by  the 
employer  on  behalf  of  the  active  teachers  of  such  local  system  in  the 
event  of  the  contemplated  merger.  From  the  present  value  of  the  total 
liability  for  pensions  on  account  of  teachers  in  service  in  the  local  district 
pension  system  as  previously  determined,  the  actuary  shall  deduct  the 
present  value  of  the  normal  contributions.  The  amount  remaining,  together 
with  the  excess,  if  any,  of  the  present  value  of  all  payments,  necessary  to 

423 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

continue  the  pensions  of  the  pensioners  of  the  local  district  pension  system, 
over  and  above  the  amount  of  the  moneys  and  securities  of  such  system, 
shall  be  known  as  the  "accrued  liability."  Provided  that  no  teacher,  a 
member  of  a  local  district  pension  system  at  the  time  of  the  passage  of  this 
act,  shall  receive  a  lesser  total  retirement  allowance  upon  retirement  after 
merger  of  the  local  system  with  the  state  system  than  said  teacher  would 
have  received  upon  retirement  under  the  provisions  of  the  local  system. 

SECTION  60.  The  actuary  shall  then  determine  the  amount  of  a  de- 
ficiency contribution  which  payable  annually  without  regard  to  the 
payroll  of  contributors  and  increasing  by  three  per  centum  of  itself  each 
year,  until  the  year  in  which  the  deficiency  contribution  payable  by  other 
employers  who  had  no  local  pension  system  may  be  expected  to  be  dis- 
continued, shall  have  a  present  value  equal  to  this  accrued  liability. 

Section  61.  The  increasing  contribution  so  determined  by  the  actuary 
shall  be  paid  by  the  employer  instead  of  the  deficiency  contribution  com- 
puted as  otherwise  provided  by  this  act,  anything  to  the  contrary  notwith- 
standing. In  the  event  of  merger,  the  moneys  and  securities  to  the 
credit  of  the  local  district  pension  system,  not  exceeding  an  aggregate 
amount  equal  to  the  present  value  of  the  payments  to  be  made  on  account 
of  all  pensions  to  the  pensions  on  the  rolls  of  the  local  district  pension 
system,  shall  be  transferred  to  the  employers'  accumulation  fund  and  the 
pensions  then  payable  by  the  local  district  pension  system  shall  thereafter 
be  paid  from  the  employers'  accumulation  fund  until  the  reserves  on  these 
pensions  with  the  other  pensions  payable  from  the  employers'  accumulation 
fund  shall  have  been  accumulated  and  shall  be  transferred  to  the  annuity 
and  pension  reserve  fund,  from  which  fund  they  shall  thereafter  be  pay- 
able. The  pensions  of  the  active  members  of  the  local  district  pension 
system  and  of  the  new  entrants  shall  thereafter  be  payable  as  are  the  pen- 
sions of  other  members  of  the  retirement  system  hereby  created.  The 
amount  of  the  excess  of  the  moneys  and  securities  of  the  local  district 
pension  system  over  and  above  the  present  value  of  the  payments  to  be 
made  on  account  of  all  pensions  to  the  pensioners  of  the  rolls  of  the 
local  district  pension  system  shall  be  transferred  to  the  teachers'  savings 
fund  and  shall  be  credited  pro  rata  to  the  active  teachers  of  such  local 
district  pension  system  on  the  basis  of  the  amounts  of  their  previous 
contributions  to  the  local  district  pension  system,  provided,  however, 
that  in  case  such  method  of  distribution  sha.ll  not  be  found  practicable 
by  the  retirement  board,  the  board  may  use  such  other  method  of  appor- 
tionment as  may  seem  fair  and  equitable  to  such  board.  The  amount 
so  credited  in  any  case  shall  be  considered  as  a  part  of  the  teacher's 
accumulated  contributions  for  all  purposes  except  in  the  case  of  retire- 
ment in  which  it  shall  be  considered  as  an  amount  in  excess  of  the  teacher's 
accumulated  contributions  and  shall  be  used  in  purchasing  from  the 
annuity  and  pensions  reserve  fund  an  annuity,  in  addition  to  any  other 
annuity  or  pension  benefit  otherwise  provided  by  this  act. 

After  the  moneys  and  securities  of  any  local  district  pension  system 
shall  have  been  transferred  to  the  employers'  accumulation  fund  or  to 
the  teachers'  savings  fund  as  hereinbefore  provided,  such  local  district  pen- 
sion system  shall  cease  to  exist. 

SECTION  62.  The  right  of  a  person  to  a  pension,  an  annuity,  or  retire- 
ment allowance  itself,  any  optional  benefit,  any  other  right  accrued  or  accru- 
ing to  any  person  under  the  provisions  of  this  act,  the  various  funds 
created  by  this  act  and  all  moneys  and  investments  and  income  thereof,  are 
hereby  exempt  from  any  state,  county,  municipal  or  other  local  tax,  and 
shall  not  be  subject  to  execution,  garnishment,  attachment,  the  operation 
of  bankruptcy  or  insolvency  laws  or  any  other  process  of  law  whatsoever, 
and  shall  be  unassignable  except  as  in  this  act  specifically  provided. 

424 


APPENDICES 

SECTION  63.  Any  person  who  shall  knowingly  make  any  false  statement 
or  shall  falsify  or  permit  to  be  falsified  any  record  or  records  of  this 
retirement  system  in  any  attempt  to  defraud  such  system  as  a  result  of 
such  act,  shall  be  guilty  of  a,  misdemeanor  and  shall  upon  conviction 
thereof  be  fined  not  less  than  ten  nor  more  than  one  thousand  dollars. 

(g)   VERMONT 

Laws  of  1919,  Chapter  57 — An  Act  to  Establish  the  Vermont  Teachers' 
Retirement  System. 

It  is  hereby  enacted  by  the  General  Assembly  of  the  State  of 
Vermont: 

Section  I.  Definitions.  The  following  words  and  phrases  as  used  in 
this  act  shall  have  the  following  meanings : 

(1)  "Teacher"    shall    mean    any    teacher,    principal,     supervisor    or 
superintendent  employed  in  a  public  day  school  within  the  state. 

(2)  "Public  school"  shall  mean  any  day  school  conducted  within  the 
state  under   the   authority  and   supervision   of   a   duly   elected   board  of 
school   directors. 

(3)  "Year"  as  used  in  this  act  referring  to  the  term  of  school  service 
of  a  teacher   shall  mean  the   same  as   "school  year,"   as   defined   in  the 
general  laws  of  the  state  at  the  time  when  the  school  service  in  question 
was  rendered,  provided,  however,  that  the  retirement  board  may  in  special 
cases  determine  what  school  service  shall  constitute  the  equivalent  of  a 
specified  period  of  service  under  this  act. 

(4)  "Interest,"    unless    herein    otherwise    provided,    shall    mean    com- 
pound   interest   at   such   rate   as    shall   be   determined  by  the   retirement 
board. 

(5)  Wherever    the    word    "he"    appears    it    shall    be    taken    to    apply 
to  females  as  well  as  males. 

SECTION  2.  Teachers'  Retirement  System.  The  Vermont  teachers'  re- 
tirement system,  hereinafter  called  the  retirement  system,  is  hereby  estab- 
lished, to  become  effective  on  July  first  nineteen  hundred  and  nineteen. 

SECTION  3.  Teachers  Retirement  Association.  An  association  to  be 
known  as  the  Vermont  teachers'  retirement  association,  hereinafter  called 
the  retirement  association,  may  be  organized  by  and  among  the  teachers 
in  the  public  schools  of  the  state.  Membership  in  said  association  may  be 
acquired  under  the  following  conditions : 

All  teachers  who  shall  serve  in  the  public  schools  on  or  after  July  first, 
nineteen  hundred  and  nineteen,  may  become  members  of  the  association, 
upon  application  to  and  approval  by  a  majority  of  the  retirement  board 
and  under  such  rules  and  regulations  as  it  may  prescribe. 

SECTION  4.  Organization.  The  teachers  who  desire  to  become  members 
of  the  retirement  association  shall,  as  soon  as  may  be  after  July  first,  nine- 
teen hundred  and  nineteen,  adopt  such  form  of  organization  for  said 
association  as  shall  be  prescribed  by  the  commissioner  of  education,  the 
state  treasurer  and  the  insurance  commissioner;  and  thereafter  such 
organization  shall  be  maintained  for  the  purposes  herein  contemplated, 
with  such  modifications  thereof  as  may  be  adopted  from  time  to  time  by 
the  members  of  the  association  with  the  approval  of  the  retirement  board. 

SECTION  5.  Teachers'  Retirement  Board.  The  administration  of  the 
retirement  system  hereby  established  is  hereby  vested  in  a  board  to  be 
known  as  the  teachers'  retirement  board,  herein  called  the  retirement 
board,  consisting  of  five  members,  as  follows :  The  commissioner  of 
education,  the  state  treasurer,  the  insurance  commissioner  and  two  mem- 
bers of  the  retirement  association.  Upon  the  organization  of  said  asso- 

425 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

ciation  the  members  thereof  shall  elect  from  among  their  number,  in  a 
manner  to  be  approved  by  the  commissioner  of  education,  the  state 
treasurer  and  the  insurance  commissioner  two  persons  to  serve  upon  the 
retirement  board,  one  member  to  serve  for  one  year  and  one  for  two 
years ;  and  thereafter  the  members  of  the  retirement  association  shall 
elect  annually  fom  among  their  number,  in  a  manner  to  be  approved  by  the 
retirement  board,  one  person  to  serve  on  said  board  for  the  term  of  two 
years. 

Until  the  organization  of  the  retirement  association  and  the  election 
of  two  representatives  therefrom  to  membership  on  the  retirement 
board,  the  commissioner  of  education,  the  state  treasurer  and  the 
insurance  commissioner  shall  be  empowered  to  perform  all  the  duties 
of  said  board. 

When  a  vacancy  occurs  in  the  retirement  board  by  reason  of  the 
death,  resignation  or  inability  to  serve  of  one  of  the  members  chosen 
by  the  retirement  association  such  vacancy  shall  be  filled  for  the  un- 
expired  term  by  the  election  of  a  new  member  of  said  association,  at  a 
meeting  duly  called  for  that  purpose. 

The  members  of  the  retirement  board  shall  serve  without  compensa- 
tion, but  they  shall  be  reimbursed  for  all  necessary  expenses  which 
they  may  sustain  through  their  service  on  the  board.  All  claims  for 
such  reimbursement  shall  be  subject  to  the  approval  of  the  auditor  of 
accounts. 

SECTION  6.  General  Duties.  The  retirement  board  shall  provide 
for  the  payment  of  retirement  allowances  and  such  other  expenditures  as 
are  prescribed  by  this  act,  and  shall  perform  such  other  functions  as  are 
required  for  the  execution  of  the  provisions  hereof ;  and  to  that  end  said 
board  shall  make  by-laws  and  regulations  not  inconsistent  with  the  pro- 
visions of  this  act,  shall  employ  a  secretary,  whose  duty  it  shall  be  to 
keep  a  record  of  all  its  proceedings,  and  shall  provide  such  other  clerical 
assistance  as  may  be  necessary  for  the  discharge  of  the  duties  prescribed 
hereunder. 

SECTION  7.  Administrative  Duties.  The  retirement  board  shall  adopt 
mortality  tables  for  the  retirement  system  hereby  created,  and,  except 
as  herein  otherwise  provided,  shall  determine  what  rates  of  interest  shall  be 
established  in  connection  with  such  tables  or  otherwise  under  the  provisions 
hereof.  Said  board  may  modify  such  mortality  tables  or  adopt  others,  and 
may  change  rates  of  interest  once  established,  unless  otherwise  provided 
herein,  but  not  so  as  to  impair  the  vested  rights  hereunder  of  any  member 
of  the  retirement  association,  unless  such  modifications  or  changes  shall 
be  assented  to  by  such  member.  Said  board  shall  establish  and  maintain, 
under  competent  actuarial  advice,  a  complete  system  of  records  and 
accounting. 

SECTION  8.  Creation  of  Annuity  Fund.  The  annuities  hereinafter  pro- 
vided shall  be  paid  out  of  a  fund  to  be  known  as  the  annuity  fund,  which 
shall  be  constituted  as  follows : 

(i)  Each  member  of  the  retirement  association  shall  pay  into  the 
annuity  fund,  under  regulations  to  be  prescribed  by  the  retirement 
board,  such  percentage  of  his  salary  as  may  be  determined  by  said  board 
within  the  limits  hereinafter  prescribed.  The  rate  of  assessment  for  each 
school  year,  which  shall  not  be  more  than  five  per  cent  of  each  member's 
salary,  shall  be  established  by  the  retirement  board  on  or  before  the 
1st  day  of  April  in  each  year,  and  notice  thereof  shall  be  given  all 
members  of  the  retirement  association  in  such  manner  as  the  retirement 
board  shall  prescribe.  Such  rate  of  assessment  shall  be  uniform,  at  any 
given  time,  for  all  members  of  the  retirement  association ;  provided,  how- 

426 


APPENDICES 

ever,  that  no  member  shall  in  any  one  year  pay  into  said  fund  less  than 
sixteen  dollars  nor  more  than  one  hundred  dollars. 

(2)  Any  member  of  the  retirement  association,  who  for  thirty  years 
shall  have  paid  into  said  fund  his  regular  assessments,  as  above  provided, 
shall  be  exempt  from  further  assessments ;  but  such  member  may  there- 
after, if  he  so  elects,  continue  to  pay  his  assessments  into  said  fund. 

(3)  The  annuity  fund  shall  also  consist  of  such  amounts  as  may  be 
appropriated  from  time  to  time  by  the  general  assembly  on  estimates  sub- 
mitted  by  the    retirement   board,   subject   to  approval   by   the   board   of 
control,  as  hereinafter  provided.     Such  estimates  shall  provide  for  an  ap- 
propriation sufficient  to  enable  the  board  to  credit  annually  to  each  member 
of    the   retirement   association   a    sum    equal    to    his   contribution    to   the 
annuity  fund  and  the  additional  allowance  provided  in  section  thirteen  of 
this  act.     Provided,  however,  that  the  state  shall  not  be  called  upon  to 
pay  into  said  annuity  fund  more  than  one  hundred  dollars  in  any  year 
on  account  of  the  contribution  of  any  one  member  of  said   retirement 
association ;  nor  shall  the  total  amount  appropriated  by  the  state  in  any  one 
year  to  carry  out  the  provisions  of  this  act  exceed  the  sum  of  twenty-five 
thousand  dollars. 

SECTION  9.  Contributions.  How  Credited.  The  contributions  made  by 
the  members  of  the  retirement  association  to  the  annuity  fund  hereinbefore 
created,  shall  be  credited  as  made  to  such  members  severally  in  individual 
accounts  up  to  the  time  of  retirement,  and  at  the  same  time  each  member 
so  contributing  shall  be  credited  individually  with  a  like  amount  as  the 
contribution  of  the  state.  Contributing  members  shall  also  be  credited 
with  the  interest  earned  by  their  several  contributions  and  by  the  equal 
contributions  made  by  the  state  as  aforesaid. 

SECTION  10.  Retirement.  Any  member  of  the  retirement  association, 
who  shall  have  served  as  a  public  school  teacher  for  a  period  of  thirty 
years,  of  which  twenty  years,  and  the  last  five  preceding  retirement,  shall 
have  been  in  this  state,  may  retire  from  service  in  the  public  schools  on 
or  after  attaining  the  age  of  sixty  years,  if  a  woman,  and  of  sixty-five 
years,  if  a  man,  without  forfeiting  any  of  the  benefits  of  the  retirement 
system ;  and  at  any  time  thereafter,  if  incapable  of  rendering  satisfactory 
service,  such  member  may  be  so  retired,  with  the  approval  of  the  retire- 
ment board. 

SECTION  11.  Reinstatement  of  Member.  Any  member  of  the  retirement 
association,  who  shall  have  withdrawn  from  service  in  the  public  schools 
of  the  state,  shall,  on  being  re-employed  therein,  be  reinstated  in  the 
retirement  association  upon!  such  terms  and  conditions  as  shall  be 
prescribed  by  the  retirement  board. 

SECTION  12.  Retirement  Allowances.  Except  as  hereinafter  provided, 
a  member  of  the  retirement  association,  who  shall  have  retired  from 
service  in  the  public  schools  of  the  state,  and  who  shall  have  complied 
with  all  the  provisions  of  this  act  and  with  the  rules  and  regulations 
of  the  retirement  board  hereby  authorized,  shall  be  entitled  to  receive  from 
the  annuity  fund  hereinbefore  established,  (i)  such  annuity  as  his  con- 
tributions to  said  fund,  with  interest  thereon,  together  with  the  like 
contributions  made  thereto  by  the  state,  and  the  interest  thereon,  will 
purchase  on  the  basis  of  McClintock's  table  of  mortality  among  annuitants, 
and  an  interest  rate  of  three  and  a  half  per  cent  annum;  or,  (2)  at  his 
option,  he  shall  be  entitled  to  receive  an  annuity  of  less  amount,  as  may  be 
determined  by  the  retirement  board  for  annuitants  electing  such  option, 
with  the  provision  that  if  the  annuitant  dies  before  receiving  payments 
equal  to  the  sum  of  his  assessments  hereunder  and  the  contributions  equal 
thereto  made  by  the  state,  as  hereinbefore  provided,  with  interest,  the 
difference  between  the  total  amount  of  said  payments  and  the  total  amount 

427 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

of  such  assessments  and  contributions,  with  interest,  shall  be  paid  as  an 
annuity  to  a  surviving  husband,  or  wife,  as  the  case  may  be,  or  to  his  or 
her  legal  representatives  as  such  member  may  elect,  subject  to  such  reason- 
able rules  and  regulations  as  the  retirement  board  may  prescribe. 

SECTION  13.  Teachers  Already  in  Service.  Any  teacher  already  in  the 
service  of  the  state  when  this  act  takes  effect,  who  shall  become  a  mem- 
ber of  the  retirement  association  when  forty-five  years  of  age  or  older, 
shall  on  retiring  as  hereinbefore  provided,  be  entitled  to  receive  the  allow- 
ance prescribed  in  the  preceding  section  for  members  entering  the  service 
of  the  state  as  teachers  after  the  passage  of  this  act,  and  such  additional 
allowance  from  the  state  as  may  be  determined  by  the  retirement  board, 
the  same  to  be  paid  as  provided  in  the  preceding  section ;  but  his  total 
annuity  hereunder  shall  not  exceed  one  half  his  average  annual  salary 
throughout  his  entire  period  of  active  service  in  the  state. 

SECTION  14.  Allowance  in  Case  of  Death  or  Disability.  A  member  of 
the  retirement  association,  who  shall  have  been  a  teacher  in  the  public 
schools  of  the  state  at  least  six  years,  and  who  shall  become  totally 
and  permanently  disabled  to  teach,  as  determined  upon  examination  by 
physicians  approved  by  the  retirement  board,  shall  receive  an  annuity  based 
upon  the  accumulated  sum  of  his  contributions  and  the  equal  contributions 
of  the  state,  with  interest,  calculated  on  the  basis  of  McClintock's  table 
of  mortality  among  annuitants  and  three  and  a  half  per  cent  interest, 
with  such  additional  annual  allowance  from  the  state  as  the  retirement 
board,  in  the  exercise  of  sound  discretion,  shall  deem  equitable,  the  same 
being  limited  by  his  earning  capacity  in  other  occupations,  such  additional 
allowance  to  be  continued  so  long,  and  in  such  amount,  as  the  retirement 
board  may  determine ;  provided,  however,  that  in  no  event  shall  the  total 
sum  received  annually  by  such  member,  under  this  section,  including  his 
annuity  and  the  additional  allowance  above  provided  for,  exceed  half  of 
his  average  annual  salary  throughout  his  entire  period  of  service  as  de- 
termined by  the  retirement  board. 

If  such  retiring  member  should  die  before  receiving  in  the  form  of  an 
annuity  all  of  the  accumulations  up  to  the  time  of  his  disability  from  his 
own  and  the  state's  annual  contributions  on  his  account,  the  balance  shall 
be  paid  to  his  or  her  legal  representatives,  as  he  or  she  may  elect,  subject 
to  such  rules  and  regulations  as  may  be  prescribed  by  the  retirement  board. 

SECTION  15.  Allowance  in  Case  of  Resignation  or  Dismisal.  (i)  Any 
member  of  the  retirement  association  withdrawing  from  service  in  the 
public  schools  of  the  state,  by  resignation  or  dismissal,  before  becoming 
eligible  to  retirement  under  the  provisions  of  this  act,  shall  be  entitled 
to  receive  from  the  annuity  fund  all  amounts  contributed  thereto  as  assess- 
ments, and,  if  at  the  time  of  such  withdrawal,  such  member  shall  have 
served  in  the  public  schools  of  the  state  six  years  or  more,  he  shall  be 
entitled  to  receive,  in  addition,  the  contributions  made  by  the  state  on  his 
account  as  hereinbefore  provided. 

(2)  In  case  of  the  death  of  such  member  under  the  circumstances  above 
set  forth,  the  several  amounts  to  which  he  would  be  entitled,  if  living,  shall 
be  paid  to  a  surviving  husband  or  wife,  or  to  the  legal  representatives  of 
such  deceased  member,  as  may  be  elected,  subject  to  the  rules  and  regula- 
tions of  the  retirement  board. 

(3)  In   the   case   of   the   death   or   withdrawal    from    service    of    such 
member  before  trie  completion  of  six  years  of  service  in  the  public  schools 
of  the  state  the  contributions  made  by  the  state  on  his  account,  as  herein- 
before provided,  shall  be  placed  in  the  reserve  fund  hereinafter  established, 
for  the  general  purposes  of  the  retirement  system. 

(4)  Contributions   returned  as   above  provided  shall  be  paid  in  lump 
sums  or  in  installments  as  the  member  may  elect,  subject,  however,  to  such 

428 


APPENDICES 

reasonable  rules  and  regulations  as  may  be  prescribed  by  the  retirement 
board. 

SECTION  16.  Exemptions.  That  portion  of  the  salary  or  wages  of  a 
member  deducted  or  to  be  deducted  under  this  act,  the  right  of  a  member 
to  an  annuity  or  allowance  hereunder,  and  all  his  rights  in  the  funds 
of  the  retirement  system,  shall  be  exempt  from  taxation,  and  from  the 
operation  of  any  laws  relating  to  bankruptcy  or  insolvency,  and  shall  not 
be  attached  or  taken  upon  execution  or  other  process  of  any  court.  No 
assignment  by  a  member  of  any  part  of  such  funds  to  which  he  is  or  may 
be  entitled,  or  of  any  right  to  or  interest  in  such  funds,  shall  be  valid. 
SECTION  17.  Administration  of  Funds. 

(1)  All  funds  of  the  retirement  system  shall  be  in  the  custody  and 
charge  of  the  state  treasurer,  who  shall  invest  and  reinvest  such  funds 
as  are  not  required  for  current  disbursements  in  accordance  wjth  the  laws 
of  the  state  governing  the  investment  of  the  assets  of  savings  institutions. 

(2)  The  state  treasurer  shall  make  such  payments  to  the  members  of 
the  retirement  association  from  the  annuity  fund  as  the  retirement  board 
shall  order  to  be  paid  in  accordance  with  the  provisions  hereof. 

(3)  On   or  before   the   first   day   of   August   in  each   year,   the   state 
treasurer  shall  file  with  the  insurance  commissioner  and  with  the  secretary 
of    the    retirement    board    a    sworn    statement    exhibiting    the    financial 
condition  of  the  retirement  system  on  the  thirtieth  day  of  June  in  each 
year,   and   its   financial   transactions    for  the   year   ending  on   such    date. 
Such  statement  shall  be  in  the  form  prescribed  by  the  retirement  board, 
and  shall  be  published  with  the  report  of  the  state  treasurer. 

SECTION  18.  Reserve  Fund.  A  reserve  fund  is  hereby  created,  to  con- 
sist of  gifts  and  receipts  from  sources  other  than  those  herein  specified, 
returns  to  the  state  of  its  contributions  to  the  annuity  fund  as  herein- 
before provided,  and  balances  that  may  accrue  on  account  of  interest,  sav- 
ings or  otherwise,  which  fund  shall  be  maintained  and  used,  in  the 
discretion  of  the  retirement  board,  for  unforeseen  contingencies,  expenses 
of  administration,  or  any  other  purpose  within  the  scope  of  the  retirement 
system. 

SECTION  19.  Accrued  Liabilities  Fund.  An  accrued  liabilities  fund  is 
hereby  created,  to  consist  of  the  Vermont  state  teachers'  retirement  fund, 
now  in  the  custody  of  the  state  treasurer  under  the  provisions  of  sections 
1220  to  1231,  inclusive,  of  the  General  Laws,  of  such  part  of  the  reserve 
fund  as  the  retirement  board  may  from  time  to  time  transfer  thereto,  and 
of  such  other  funds  as  may  be  received  by  the  retirement  board  for  the 
purposes  contemplated  in  this  section.  Provided,  however,  that  said 
Vermont  teachers'  retirement  fund  shall  not  become  part  of  the  funds  of 
the  retirement  system  as  contemplated  in  this  section  except  upon  a  vote 
to  that  effect  of  the  Vermont  state  teachers'  retirement  fund  association, 
duly  certified  to  the  retirement  board  by  the  president  of  said  association. 
The  accrued  liabilities  fund  shall  be  drawn  upon  from^time  to  time  by  the 
retirement  board  as  needed  to  make  up  the  contributions  of  the  state  to 
the  retiring  and  disability  allowances  provided  hereunder.  Said  funds 
shall  be  in  all  respects  subject  to  the  provisions  of  this  act,  and  to  the 
rules  and  regulations  of  the  retirement  board  hereby  authorized  in  respect 
to  custody,  investment,  audit  and  disbursement. 

SECTION  20.  Supervision  of  Retirement  System.  The  retirement  board 
shall  cause  the  system  hereby  established  to  be  thoroughly  examined  by 
a  competent  actuary  or  actuaries,  once  in  every  three  years,  and  oftener 
if  deemed  necessary,  and  many  call  an.  actuary  in  consultation  at  any 
time ;  and  such  board  is  hereby  empowered  to  change  the  scale  of  con- 
tributions required  of  teachers,  if  deemed  advisable  as  the  result  of  ac- 
tuarial experience  hereunder;  but  such  changes  shall  not  be  effective 

429 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

as  to  teachers  becoming  members  of  the  retirement  association  before 
the  same  shall  have  been  made,  unless  assented  to  by  such  members. 

SECTION  21.  The  accounts  of  the  retirement  board  and  the  books  and 
accounts  of  the  state  treasurer  as  custodian  of  the  funds  of  the  retirement 
system,  and  the  cash  and  securities  in  his  hands  representing  such  funds, 
shall  be  examined  and  audited  annually  at  the  time  and  in  the  manner 
prescribed  for  the  annual  audit  of  the  accounts  of  the  trustees  of  the 
permanent  school  fund  and  the  accounts  of  the  state  treasurer  in  con- 
nection therewith. 

SECTION  22.  Appropriation.  The  sum  of  twenty-five  thousand  dollars 
per  annum  is  hereby  appropriated  to  carry  out  the  provisions  of  this  act 
for  the  biennial  period  beginning  July  I,  1919. 

SECTION  23.  Changes  in  Rules  and  Regulations.  The  rules  and  regula- 
tions hereby  prescribed  for  the  administration  of  the  retirement  system 
hereby  created,  shall  be  subject  to  change  by  the  retirement  board  whenever 
deemed  to  be  for  the  best  interests  of  the  entire  body  of  teachers  in  the 
service  of  the  state.  The  benefits  of  the  retirement  system  shall  be 
enjoyed  by  each  member  of  the  retirement  association  so  long  as  he 
meets  all  the  requirements  of  this  act  and  complies  with  all  the  rules 
and  regulations  of  the  retirement  board. 

SECTION  24.  Sections  of  General  Laws  Repealed.  Sections  one  thou- 
sand two  hundred  and  twenty  to  one  thousand  two  hundred  and  thirty- 
one,  inclusive,  of  the  General  Laws  are  hereby  repealed;  provided,  how- 
ever, that  those  provisions  of  said  sections  relating  to  the  custody  and 
control  of  the  Vermont  state  teachers'  retirement  fund  referred  to  in 
section  twenty  of  this  act  shall  continue  in  force  until  the  transfer  of  said 
fund  to  the  retirement  system  as  hereinbefore  provided. 

SECTION  25.    This  act  shall  take  effect  from  its  passage. 

Approved   April   8,    1919. 


430 


APPENDIX  4 
ACTUARIAL  TABLES 

The  tables  shown  below  present  part  of  the  foundation  upon  which 
some  of  the  recent  actuarial  systems  operate.  They  may  help  the  reader 
to  understand  the  elements  of  actuarial  computations.  The  first  three 
tables  may  enable  him  to  calculate  how  much  a  certain  annual  contribu- 
tion will  accumulate  in  the  course  of  years  and  what  annuity  it  will  provide. 

The  American  Experience  Tables  upon  which  Massachusetts  system 
operates  is  based  upon  the  mortality  experience  of  the  population  at  large 
and  makes  no  distinction  between  the  two  sexes  as  to  mortality.  The 
McClintock  Experience  adopted  by  Vermont  presents  the  experience 
of  the  annuitants  of  the  Home  Life  Insurance  Company.  The  New 
York  City  Teachers'  Experience  and  the  New  Jersey  Teachers' 
Adopted  Experience,  which  were  prepared  by  Mr.  Geo.  B.  Buck,  ac- 
tuary, probably  represent  the  real  mortality  of  the  teachers  better 
than  any  other  table. 

In  comparing  the  reserves  and  annuities  under  the  different  tables 
it  must  be  noted  that  in  the  American  Experience  and  McClintock 
Experience  Tables  here  shown  interest  was  assumed  at  2>l/t  per  cent  as  the 
latter  is  the  interest  adopted  by  Massachusetts  and  Vermont,  whereas  the 
New  York  City  and  New  Jersey  tables  are  computed  at  4  per  cent,  as  4 
per  cent  is  the  interest  adopted  by  the  New  York  City  and  New  Jersey 
systems. 


431 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

TABLE  1 

COMPOUND  INTEREST 

The  amount  accumulated  by  a  deposit  of  SI  paid  at  the  beginning  of  each 
year,  at  various  rates  of  interest  after  a  certain  number  of  years 


Year 

3% 

3K% 

4% 

1 

$  1.0300 

$  1.0350 

$  1.0400 

2 

2.0909 

2.1062 

2.1216 

3 

3.1836 

3.2149 

3.2465 

4 

4.3091 

4.3625 

4.4163 

5 

5.4684 

5.5502 

5.6330 

6 

6.6625 

6.7794 

6.8983 

7 

7.8923 

8.0517 

8.2142 

8 

9.1591 

9.3685 

9.5828 

9 

10.4639 

10.7314 

11.0061 

10 

11.8078 

12.1420 

12.4864 

11 

13.1920 

13.6020 

14.0258 

12 

14.6178 

15.1130 

15.6268 

13 

16.0863 

16.6770 

17.2919 

14 

17.5989 

18.2957 

19.0236 

15 

19.1569 

19.9710 

20.8245 

16 

20.7616 

21  .  7050 

22.6975 

17 

22.4144 

23.4997 

24.6454 

18 

24.1169 

25.3572 

26.6712 

19 

25.8704 

27.2797 

28.7781 

20 

27.6765 

29.2695 

30.9692 

21 

29.5368 

31.3289 

33.2480 

22 

31.4529 

33.4604 

35.6179 

23 

33.4265 

35.6665 

38.0826 

24 

35.4593 

37.9499 

40.6459 

25 

37.5550 

40.3131 

43.3117 

26 

39.7096 

42.7591 

46.0842 

27 

41.9309 

45.2906 

48.9676 

28 

44.2189 

47.9108 

51.9663 

29 

46.5754 

50.6227 

55.0849 

30 

49.0027 

53.4295 

58.3283 

31 

51.5028 

56.3345 

61.7015 

32 

54.0778 

59.3412 

65.2095 

33 

56.7302 

62.4532 

68.8579 

34 

59.4621 

65  .  6740 

72.6522 

35 

62.2759 

69.0076 

76.5983 

36 

65.1742 

72.4579 

80.7022 

37 

68.1594 

76.0289 

84.9703 

38 

71.2342 

79.7249 

89.4091 

39 

74.4013 

83.5503 

94.0255 

40 

77.6633 

87.5095 

98.8265 

41 

81.0232 

91.6074 

103.8196 

42 

84.4839 

95.8486 

109.0124 

43 

88.0484 

100.2383 

114.4129 

44 

91.7199 

104.7817 

120.0294 

45 

95.5015 

109.4840 

125.8706 

46 

99.3965 

114.3510 

131.9454 

47 

103.4081 

119.3883 

138.2632 

48 

107.5406 

124.6018 

144.8337 

49 

111.7969 

129.9979 

151.6671 

50 

116.1803 

135.5828 

158.7738 

432 


APPENDICES 


TABLE  2 

ANNUITY  VALUES 
Amount  of  reserve  necessary  to  provide  an  annuity  of  $1.00  at  a  certain  age 


Age 

American 
Experience 
3M%  Interest 
(adopted  by 
Massachusetts 
System) 

New  York  City 
Teachers' 
Experience 
4%  Interest 

New  Jersey 
Teachers' 
Adopted 
Experience 

4%  Interest 

McClintock  Experience 

3H%  Interest 
(adopted  by 
Vermont 
System) 

4% 
Interest 

MEN 


55 

$10.23 

$10.332 

$11.915 

56 

10.05 

10.125 

11.615 

57 

9.86 

9.914 

11.312 

58 

9.66 

9.697 

11.005 

59 

9.45 

9.476 

10.696 

60 

$10.66 

9.23 

9.250 

10.384 

61 

10.29 

9.01 

9.020 

10.070 

62 

9.93 

8.77 

8.786 

9.754 

63 

9.57 

8.54 

8.549 

9.438 

64 

9.20 

8.29 

8.309 

9.121 

65 

8.84 

8.04 

8.066 

$9.0986 

8.804 

66 

8.49 

7.79 

7.820 

8.7617 

8.488 

67 

8.14 

7.54 

7.573 

8.4269 

8.173 

68 

7.79 

7.28 

7.324 

8.0946 

7.859 

69 

7.44 

7.02 

7.7654 

7.548 

70 

7.10 

6.76 

7.4400 

7.239 

WOMEN 

55 

$12.83 

$12.823 

$13.296 

56 

12.56 

12.537 

12.985 

57 

12.28 

12.246 

12.671 

58 

11.99 

11.950 

12.352 

59 

11.70 

11.650 

12.030 

60 

$10.66 

11.39 

11.347 

$12.2198 

11.705 

61 

10.29 

11.08 

11.040 

11.8630 

11.377 

62 

9.93 

10.76 

10.731 

11.5045 

11.046 

63 

9.57 

10.43 

10.419 

11.1450 

10.714 

64 

9.20 

10.10 

10.105 

10.7850 

10.381 

65 

8.84 

9.76 

9.789 

10.4245 

10.046 

66 

8.49 

9.42 

9.472 

10.C647 

9.711 

67 

8.14 

9.08 

9.155 

9.7060 

9.376 

68 

7.79 

8.73 

8.838 

9.3489 

9.042 

69 

7.44 

8.39 

8.9943 

8.709 

70 

7.10 

8.04 

8.6424 

8.378 

433 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


TABLE  3 

ANNUITIES   PURCHASED   BY   ACCUMULATED   CONTRIBUTIONS  OF   CERTAIN 

AMOUNTS  AT  CERTAIN  AGES  ACCORDING  TO  THE  NEW  JERSEY 

TEACHERS'  ADOPTED  EXPERIENCE  AND  ON  THE  BASIS 

OF  INTEREST  AT  4  PER  CENT 


ACCUMULATED  CONTRIBUTIONS  OF 

Age 

$100 

$150 

$200 

$250 

$300     1     $350 

$400 

$450 

$500 

MEN 

55 

56 

$9.68 
9.88 

$14.52 
14.82 

$19.36 
19.76 

$24.20 
24.70 

$29.04 
29.64 

$33.88 
34.58 

$38.72 
39.52 

$43.56 
44.46 

$48.40 
49.40 

57 

10.08 

15.12 

20.16 

25.20 

30.24 

35.28 

40.32 

45.36 

50.40 

58 

10.32 

15.48 

20.64 

25.80 

30.96 

36.12 

41.28 

46.44 

51.60 

59 

10.56 

15.84 

21.12 

26.40 

31.68 

36.96 

42.24 

47.52 

52.80 

60 

10.82 

16.23 

21.64 

27.05 

32.46 

37.87 

43.28 

48.69 

54.10 

61 

11.08 

16.62 

22.16 

27.70 

33.24 

38.78 

44.32 

49.86 

55.40 

62 

11.38 

17.07 

22.76 

28.45 

34.14 

39.83 

45.52 

51.21 

56.90 

63 

11.70 

17.55 

23.40 

29.25 

35.10 

40.95 

46.80 

52.65 

58.50 

64 

12.04 

18.06 

24.08 

30.10 

36.12 

42.14 

48.16 

54.18 

60.20 

65 

12.40 

18.60 

24.80 

31.00 

37.20 

43.40 

49.60 

55.80 

62.00 

66 

12.78 

19.17 

25.56 

31.95 

38.34 

44.73 

51.12 

57.51 

63.90 

67 

13.20 

19.80 

26.40 

33.00 

39.60 

46.20 

52.80 

59.40 

66.00 

68 

13.66 

20.49 

27.32 

34.15 

40.98 

47.81 

54.64 

61.47 

68.30 

69 

14.14 

21.21 

28.28 

35.35 

42.42 

49.49 

56.56 

63.63 

70.70 

70 

14.66 

21.99 

29.32 

36.65 

43.98 

51.31 

58.64 

65.97 

73.30 

WOMEN 


55 

$7.80 

$11.70 

$15.60 

$19.50 

$23.40 

$27.30 

$31.20 

$35.10 

$39.00 

56 

7.98 

11.97 

15.96 

19.95 

23.94 

27.93 

31.92 

35.91 

39.90 

57 

8.16 

12.24 

16.32. 

20.40 

24.48 

28.56 

32.64 

36.72 

40.80 

58 

8.36 

12.54 

16.72 

20.90 

25.08 

29.26 

33.44 

37.62 

41.80 

59 

8.58 

12.87 

17.16 

21.45 

25.74 

30.03 

34.32 

38.61 

42.90 

60 

8.82 

13.23 

17.64 

22.05 

26.46 

30.87 

35.28 

39.69 

44.10 

61 

9.06 

13.59 

18.12 

22.65 

27.18 

31.71 

36.24 

40.77 

45.30 

62 

9.32 

13.98 

18.64 

23.30 

27.96 

32.62 

37.28 

41.94 

46.60 

63 

9.60 

14.40 

19.20 

24.00 

28.80 

33.60 

38.40 

43.20 

48.00 

64 

9.90 

14.85 

19.80 

24.75 

29.70 

34.65 

39.60 

44.55 

49.50 

65 

10.22 

15.33 

20.44 

25.55 

30.66 

35.77 

40.88 

45.99 

51.10 

66 

10.56 

15.84 

21.12 

26.40 

31.68 

36.96 

42.24 

47.52 

52.80 

67 

10.92 

16.38 

21.84 

27.30 

32.76 

38.22 

43.68 

49.14 

54.60 

68 

11.32 

16.98 

22.64 

28.30 

33.96 

39.62 

45.28 

50.94 

56.60 

69 

11.74 

17.61 

23.48 

29.35 

35.22 

41.09 

46.96 

52.83 

58.70 

70 

12.18 

18.27 

24.36 

30.45 

36.54 

42.63 

48.72 

54.81 

60.90 

434 


APPENDICES 


TABLE  3— (Continued) 

ANNUITIES  PURCHASED   BY  ACCUMULATED   CONTRIBUTIONS  OF   CERTAIN 

AMOUNTS  AT  CERTAIN  AGES  ACCORDING  TO  THE  NEW  JERSEY 

TEACHERS'  ADOPTED  EXPERIENCE  AND  ON  THE  BASIS 

OF  INTEREST  AT  4  PER  CENT 


Age 


ACCUMULATED  CONTRIBUTIONS  OF 


$550     I     $600     I     $650          $700     I     $750     I     $800     I     $850     |     $900     I     $950 


MEN 


55 

$53.24 

$58.08 

$62.92 

$67.76 

$72.60 

$77.44 

$82.28 

$87.12 

$91.96 

56 

54.34 

59.28 

64.22 

69.16 

74.10 

79.04 

83.98 

88.92 

93.86 

57 

55.44 

60.48 

65.52 

70.56 

75.60 

80.64 

85.68 

90.72 

95.76 

58 

56.76 

61.92 

67.08 

72.24 

77.40 

82.56 

87.72 

92.88 

98.04 

59 

58.08 

63.36 

68.64 

73.92 

79.20 

84.48 

89.76 

95.04 

100.32 

60 

59.51 

64.92 

70.33 

75.74 

81.15 

86.56 

91.97 

97.38 

102.79 

61 

60.94 

66.48 

72.02 

77.56 

83.10 

88.64 

94.18 

99.72 

105.26 

62 

62.59 

68.28 

73.97 

79.66 

85.35 

91.04 

96.73 

102.42 

108.11 

63 

64.35 

70.20 

76.05 

81.90 

87.75 

93.60 

99.45 

105.30 

111.15 

64 

66.22 

72.24 

78.26 

84.28 

90.30 

96.32 

102.34 

108.36 

114.38 

65 

68.20 

74.40 

80.60 

86.80 

93.00 

99.20 

105.40 

111.60 

117.80 

66 

70.29 

76.68 

83.07 

89.46 

95.85 

102.24 

108.63 

115.02 

121.41 

67 

72.60 

79.20 

85.80 

92.40 

99.00 

105.60 

112.20 

118.80 

125.40 

68 

75.13 

81.96 

88.79 

95.62 

102.45 

109.28 

116.11 

122.94 

129.77 

69 

77.77 

84.84 

91.91 

98.98 

106.05 

113.12 

120.19 

127.26 

134.33 

70 

80.63 

87.96 

95.29 

102.62 

109.95 

117.28 

124.61 

131.94 

139.27 

WOMEN 


55 

$42.90 

$46.80 

$50.70 

$54.60 

$58.50 

$62.40 

$66.30 

$70.20 

$74.10 

56 

43.89 

47.88 

51.87 

55.86 

59.85 

63.84 

67.83 

71.82 

75.81 

57 

44.88 

48.96 

53.04 

57.12 

61.20 

65.28 

69.36 

73.44 

77.52 

58 

45.98 

50.16 

54.34 

58.52 

62.70 

66.88 

71.06 

75.24 

79.24 

59 

47.19 

51.48 

55.77 

60.06 

64.35 

68.64 

72.93 

77.22 

81.51 

60 

48.51 

52.92 

57.33 

61.74 

66.15 

70.56 

74.97 

79.38 

83.79 

61 

49.83 

54.36 

58.89 

63.42 

67.95 

72.48 

77.01 

81.54 

86.07 

62 

51.26 

55.92 

60.58 

65.24 

69.90 

74.56 

79.22 

83.88 

88.54 

63 

52.80 

57.60 

62.40 

67.20 

72.00 

76.80 

81.60 

86.40 

91.20 

64 

54.45 

59.40 

64.35 

69.30 

74.25 

79.20 

84.15 

89.10 

94.05 

65 

56.21 

61.32 

66.43 

71.54 

76.65 

81.76 

86.87 

91.98 

97.09 

66 

58.08 

63.36 

68.64 

73.92 

79.20 

84.48 

89.76 

95.04 

100.32 

67 

60.06 

65.52 

70.98 

76.44 

81.90 

87.36 

92.82 

98.28 

103.74 

68 

62.26 

67.92 

73.58 

79.24 

84.90 

90.56 

96.22 

101.88 

107.54 

69 

64.57 

70.44 

76.31 

82.18 

88.05 

93.92 

99.79 

105.66 

111.53 

70 

66.99 

73.08 

79.17 

85.26 

91.35 

97.44 

103.53 

109.62 

115.71 

435 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


TABLE  4 

EXPECTATION  OF  LIFE 
(Number  of  years  persons  of  certain  age  would  on  the  average  live  thereafter) 


American  Experience 

New  York  City 

McClintock 

Age 

(adopted  by  Massa- 
chusetts System) 

Teachers' 
Experience 

Experience 

MEN 

55 

56 

17.40 
16.72 

14.76 
14.37 

17.79 
17.14 

57 

16.05 

13.96 

16.50 

58 

15.39 

13.55 

15.88 

59 

14.74 

13.13 

15.26 

60 

14.10 

12.70 

14.65 

61 

13.47 

12.28 

14.05 

62 

12.86 

11.84 

13.46 

63 

12.26 

11.41 

12.88 

64 

11.67 

10.98 

12.31 

65 

11.10 

10.55 

11.76 

66 

10.54 

10.12 

11.22 

67 

10.00 

9.70 

10.69 

68 

9.47 

9.28 

10.17 

69 

8.97 

8.86 

9.67 

70 

8.48 

8.45 

9.18 

WOMEN 

55 

17.40 

19.78 

20.77 

56 

16.72 

19.13 

20.04 

57 

16.05 

18.49 

19.32 

58 

15.39 

17.84 

18.61 

59 

14.74 

17.20 

17.91 

60 

14.10 

16.55 

17.22 

61 

13.47 

15.91 

16.54 

62 

12.86 

15.27 

15.87 

63 

12.26 

14.64 

15.22 

64 

11.67 

14.01 

14.57 

65 

11.10 

13.38 

13.94 

66 

10.54 

12.77 

13.33 

67 

10.00 

12.16 

12.72 

68 

9.47 

11.57 

12.14 

69 

8.97 

10.99 

11.56 

70 

8.48 

10.43 

11.00 

436 


APPENDICES 

TABLE  5 
RATE  OF  MORTALITY 


Age 

American 
Experience 
(adopted  in  the 
Massachusetts 
System) 

New  York  City 
Teachers' 
Experience 

New  Jersey 
Teachers'  Adopted 
Experience 

McClintock 
Experience 
(adopted  by  the 
Vermont 
System) 

MEN  ANNUITANTS 


55 

.0186 

.0407 

.0377 

.0201 

56 

.0199 

.0411 

.0387 

.0213 

57 

.0213 

.0418 

.0399 

.0227 

58 

.0229 

.0426 

.0412 

.0241 

59 

.0247 

.0436 

.0426 

.0258 

60 

.0267 

.0448 

.0441 

.0275 

61 

.0289 

.0460 

.0458 

.0294 

62 

.0313 

.0476 

.0477 

.0315 

63 

.0339 

.0494 

.0497 

.0338 

64 

.0369 

.0516 

.0519 

.0364 

65 

.0401 

.0538 

.0543 

.0391 

66 

.0437 

.0566 

.0569 

.0421 

67 

.0476 

.0593 

.0599 

.0454 

68 

.0520 

.0626 

.0630 

.0490 

69 

.0568 

.0660 

.0665 

.0529 

70 

.0620 

.0698 

.0702 

.0572 

WOMEN  ANNUITANTS 


55 

.0186 

.0181 

.0169 

.0132 

56 

.0199 

.0187 

.0178 

.0141 

57 

.0213 

.0194 

.0188 

.0151 

58 

.0229 

.0201 

.0199 

.0163 

59 

.0247 

.0209 

.0212 

.0175 

60 

.0267 

.0218 

.0225 

.0188 

61 

.0289 

.0229 

.0239 

.0203 

62 

.0313 

.0240 

.0255 

.0219 

63 

.0339 

.0255 

.0273 

.0237 

64 

.0369 

.0271 

.0292 

.0256 

65 

.0401 

.0290 

.0313 

.0277 

66 

.0437 

.0312 

.0335 

.0300 

67 

.0476 

.0337 

.0361 

.0326 

68 

.0520 

.0366 

.0388 

.0353 

69 

.0568 

.0399 

.0418 

.0384 

70 

.0620 

.0436 

.0450 

.0417 

437 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


TABLE  6 

NEW  JERSEY  TEACHERS'  ADOPTED  ACTIVE  SERVICE  EXPERIENCE 
Showing  how  many  from  an  initial  number  of  100,000  teachers  entering 
the  service  at  the  age  of  18  would  withdraw  through  resignation  or  dismissal, 
become  disabled  or  die  each  year,  and  how  their  salaries  would  advance  on 
the  average  each  year. 

MEN 


Age 

Living 

Withdrawing 

Disabled 

Dead 

Salary  Scale 

18 

100,000 

2,080 

50 

240 

530 

19 

97,630 

2,148 

49 

244 

615 

20 

95,189 

2,361 

48 

247 

694 

21 

92,533 

2,378 

46 

259 

772 

22 

89,850 

2,363 

45 

261 

849 

23 

87,181 

2,310 

43 

262 

920 

24 

84,566 

2,224 

42 

271 

990 

25 

82,029 

2,114 

41 

273 

1,060 

26 

79,601 

1,994 

39 

275 

1,130 

27 

77,293 

1,861 

41 

278 

1,200 

28 

75,113 

1,712 

43 

281 

1,270 

29 

73,077 

1,572 

44 

284 

1,330 

30 

71,177 

1,442 

45 

285 

1,390 

31 

69,405 

1,307 

46 

285 

1,450 

32 

67,767 

1,170 

47 

281 

1,510 

33 

66,269 

1,057 

48 

280 

1,560 

34 

64,884 

952 

49 

277 

1,605 

35 

63,606 

859 

50 

274 

1,650 

36 

62,423 

758 

51 

271 

1,695 

37 

61,343 

672 

52 

270 

1,735 

38 

60,349 

582 

53 

270 

1,775 

39 

59,444 

508 

54 

270 

1,812 

40 

58,612 

435 

58 

269 

1,845 

41 

57,850 

366 

59 

269 

1,875 

42 

57,156 

309 

62 

269 

1,905 

43 

56,516 

254 

68 

271 

1,935 

44 

55,923 

213 

78 

274 

1,965 

45 

55,358 

177 

83 

277 

1,990 

46 

54,821 

148 

93 

285 

2,015 

47 

54,295 

119 

98 

288 

2,040 

48 

53,790 

97 

107 

296 

2,065 

49 

53,290 

80 

117 

304 

2,085 

50 

52,789 

58 

132 

317 

2,105 

51 

52,282 

42 

147 

324 

2,125 

52 

51,769 

26 

160 

336 

2,145 

53 

51,247 

15 

179 

354 

2,165 

54 

50,699 

198 

370 

2,180 

55 

50,131 

221 

391 

2,195 

56 

49,519 

243 

411 

2,205 

57 

48,865 

274 

435 

2,215 

58 

48,156 

304 

462 

2,225 

59 

47,390 

341 

493 

2,235 

60 

46,556 

382 

521 

2,245 

61 

45,653 

438 

549 

2,?50 

62 

44,666 

491 

581 

2,255 

438 


APPENDICES 


TABLE  6— (Continued) 
WOMEN 


Age 

Living 

Withdrawing 

Disabled 

Dead 

Salary  Scale 

18 

100,000 

260 

50 

110 

513 

19 

99,580 

628 

50 

119 

528 

20 

98,783 

1,216 

49 

128 

543 

21 

97,390 

2,084 

49 

136 

566 

22 

95,121 

3,025 

48 

152 

592 

23 

91,896 

5,182 

47 

165 

622 

24 

86,502 

6,233 

47 

173 

659 

25 

80,049 

6,086 

46 

184 

699 

26 

73,733 

5,678 

44 

184 

740 

27 

67,827 

5,098 

44 

190 

780 

28 

62,495 

4,481 

44 

187 

815 

29 

57,783 

3,862 

44 

185 

845 

30 

53,692 

3,302 

43 

177 

870 

31 

50,170 

2,749 

40 

171 

890 

32 

47,210 

2,224 

42 

165 

910 

33 

44,779 

1,760 

45 

161 

930 

34 

42,813 

1,364 

45 

154 

950 

35 

41,250 

1,081 

45 

149 

970 

36 

39,975 

863 

48 

148 

990 

37 

38,916 

688 

51 

152 

1,000 

38 

38,025 

605 

61 

152 

1,010 

39 

37,207 

495 

108 

156 

1,020 

40 

36,448 

405 

164 

160 

1,030 

41 

35,719 

321 

229 

164 

1,040 

42 

35,005 

256 

308 

168 

1,050 

43 

34,273 

189 

353 

171 

1,055 

44 

33,560 

144 

369 

178 

1,060 

45 

32,869 

112 

371 

184 

1,065 

46 

32,202 

90 

367 

190 

1,070 

47 

31,555 

72 

360 

196 

1,080 

48 

30,927 

59 

352 

204 

1,085 

49 

30,312 

54 

346 

212 

1,090 

50 

29,700 

47 

339 

223 

1,095 

51 

29,091 

43 

332 

233 

1,100 

52 

28,483 

40 

325 

242 

1,110 

53 

27,876 

36 

318 

254 

1,115 

54 

27,268 

35 

311 

265 

1,120 

55 

26,657 

29 

304 

277 

1,130 

56 

26,047 

26 

297 

292 

1,140 

57 

25,432 

23 

290 

305 

1,145 

58 

24,814 

22 

283 

320 

1,150 

59 

24,189 

19 

276 

336 

1,160 

60 

23,558 

14 

269 

353 

1,165 

61 

22,922 

11 

262 

371 

1,175 

62 

22,278 

9 

254 

390 

1,180 

439 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 


TABLE  7 

NEW  JERSEY  TEACHERS'  ADOPTED  RETIREMENT  EXPERIENCE 

Number  of  teachers  among  those  eligible  to  retirement  who  would  die  or 

retire  during  the  year  and  the  number  among  them  who  would  be 

living  at  the  beginning  of  the  next  year 


Age                            Living 

Dead 

Retirements 

MEN 

60 

52,295 

593 

3,906 

61 

47,796 

642 

3,828 

62 

43,326 

673 

3,744 

63 

38,909 

700 

3,623 

64 

34,586 

719 

3,462 

65 

30,405 

711 

3,299 

66 

26,395 

677 

3,141 

67 

22,577 

643 

3,003 

68 

18,931 

602 

3,114 

69 

15,215 

514 

3,652 

70 

11,049 

398 

10,651 

WOMEN 


60 

24,270 

364 

3,174 

61 

20,732 

335 

2,944 

62 

17,453 

305 

2,740 

63 

14,403 

272 

2,550 

64 

11,586 

237 

2.317 

65 

9,032 

200 

2,068 

66 

6,764 

162 

1,826 

67 

4,776 

124 

1,567 

68 

3,085 

87 

1,333 

69 

1,665 

51 

1,091 

70 

523 

17 

505 

440 


APPENDIX  5 

BIBLIOGRAPHY 
TEACHERS'  PENSION  SYSTEMS  IN  THE  UNITED  STATES 

Contents 

ITEMS 

Bibliographies    1-4 

Discussions  of  pension  principles 5-56 

General  descriptions  of  pension  systems  in  the  United 

States    57-75 

NOTE. — References  to  laws,  reports  and  descriptive  accounts  of  indi- 
vidual systems  are  listed  in  Appendix  2. 

BIBLIOGRAPHIES 

NOTE. — Many  of  the  references  on  pensions  given  in  the  Bibliographies 
listed  below  have  been  incorporated  in  the  present  one.  Publications  of 
special  importance  are  indicated  by  an  asterisk. 

1  Nelson,  C.  A.  comp.     Bibliography  of  teachers'  salaries 

and  pensions.    Educational  review,  Jan.,  1907,  v.  33 : 

24-35- 

[A  list  containing  27  references  on  teachers'  pensions 

together  with  an  extended  reference  list  on  teachers' 

salaries.] 

2  Prosser,  C.  A.     Bibliography  (In  his  The  teacher  and 

old  age.    Boston,  1913.    p.  121-34). 

[A  list  of  48  references  on  teachers'  pensions,  social 

insurance  and  the  economic  condition  of  the  teaching 

profession.] 

3  U.  S.  Bureau  of  education.    Library.    List  of  references 

on  teachers'  pensions.    June  1914.     7  p. 
[Contains  51  references  on  U.  S.  pensions,  21  refer- 
ences on  college  professors'  pensions  and  35  references 
on  foreign  pensions.] 

4     Library  of  Congress.    Divsion  of  bibliography. 

Select  list  of  references  on  teachers'  pensions.    6  numb. 
1  (typewritten). 

[Contains  60  references  on  teachers'  pensions.] 
441 


DISCUSSION  OF  PENSION  PRINCIPLES 

5  Allen,  Elizabeth  A.    Birth  of  the  teachers'  pension  move- 

ment in  the  United  States.  Address  before  the  Con- 
necticut teachers'  association.  (In  Connecticut.  Board 
of  education.  Report.  Hartford,  1903.  p.  291-303. 
Pub.  doc.  no.  8.) 

[Contains  a  history  of  the  New  Jersey  retirement 
fund;  discussion  of  purposes  of  pensions;  objections 
of  old  and  young  teachers ;  fund  not  a  charity ;  appeal 
to  the  Connecticut  teachers.] 

6     Teachers'  pensions — the  story  of  a  woman's  cam- 
paign.  Review  of  reviews  (N.  Y.)  June,  1897,  v-  J5: 
700-11. 

[Describes  the  campaign  which  resulted  in  the  estab- 
lishment of  the  New  Jersey  teachers'  retirement  fund; 
surveys  the  existing  pension  funds  in  the  United  States ; 
presents  a  comparative  table  of  annuity  and  aid  asso- 
ciations and  retirement  funds  in  the  United  States.] 

7  Ames,  Charles  L.     Pensions  for  public  school  teachers 

[Hartford  ?  1912]  16  p. 

[Address  before  the  Connecticut  Women's  council  of 

education  at  Hartford,  May  4,  1912.] 

8  Association  of  American  universities.     The  best  means 

of  introducing  the  pension  system  into  American  uni- 
versities. Discussion.  (In  its  Journal  of  proceedings 
and  addresses  of  eighth  annual  conference,  1907,  p. 
64-71.) 

9  Best,  Lyman  A.  Teachers'   retirement  fund.     Address 

given  at  Washington,  January  16,  1909,  before  the 
College  women's  club.  [Washington,  Govt.  print,  off., 
1910]  9  p.  ([U.  S.]  6ist  Cong.,  2d  sess.  Senate. 
Doc.  541.) 

[Contains  a  discussion  of  the  purposes  of  teachers* 
pensions  and  a  history  of  the  New  York  City  Teachers* 
retirement  fund.] 

IO     Bradford,  Mary  D.     Teachers'  pensions  and  insurance. 
Journal  of  education,  May  n,  1905,  v.  61 ;  512-13. 
[Describes  the  origin  and  development  of  pension  and 
insurance  movement  among  the  teachers  in  the  United 
States.] 

442 


APPENDICES 

11  Carnegie  foundation  for  the  advancement  of  teaching. 

Annual  reports.     [Articles  on  pensions.] 

I,  1906,  p.  33-36.     (Consideration  of  general  policy. 

What  is  the  value  of  a  pension  system?  right, 

not  charity.) 

III,  1908,  p.  50-51.      (Cost  of  maintaining  a  retire- 

ment allowance  system.) 

IV,  1909,  p.  57-80.     (The  working  of  the  rules  for 

retirement ;  why  college  teachers  retire ;  age  and 
service;  obligations  in  life  insurance.) 

VI,  1911,  p.  22-23.     (The  moral  influence  of  a  pension 

system;  favors  contributory  systems;  obliga- 
tions of  colleges.) 

VII,  1912,  p.  59-87.     (Contributory  and  non-contribu- 

tory pension  systems.  Subsistence  and  sti- 
pendiary pensions.  A  feasible  pension  system 
— six  years  of  experience.) 

12  * A  comprehensive  plan  of  insurance  and  annuities 

for  college  teachers,  by  H.  S.  Pritchett,  1916.  67  p. 
(Its  Bulletin  no.  9.) 

Contents:  Pensions  and  annuities.  The  origin  and 
social  philosophy  of  pension  systems.  Justification 
for  college  teachers.  Life  hazards.  Responsibility. 
Functions  and  possibilities  of  life  insurance.  Are  pen- 
sions wages.  Accrued  liabilities.  Risk  of  disability. 
The  teachers'  cooperation.  The  desires  of  teachers. 

I2a  * Pensions   for  public  school  teachers.     By  Clyde 

Furst  and  I.  L.  Kandel.  Bulletin  no.  12,  1918.  85  p. 
Contents :  The  social  philosophy  of  pensions.  Funda- 
mental principles,  present  status.  A  system  sug- 
gested for  Vermont.  Tabular  statement.  Summary. 
Brief  bibliography. 

13  Cattell,  J.  McKeen.     The  Carnegie  foundation  for  the 

advancement  of  teaching.  Science,  April  2,  1909, 
n.s.  v.  29 :  532-9. 

[Writer  objects  to  the  age  condition  and  to  the  cen- 
tralized fund;  advocates  disability  and  widows'  pen- 
sions; predicts  insufficiency  of  income.] 

14  Clark,    John    E.      Shall    teachers   be   pensioned?      (In 

National  education  association.  Journal  of  proceed- 
ings and  addresses,  1896.  p.  988-96.) 

443 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

[Urges  teachers  to  establish  retirement  funds  and 
take  part  in  the  movement';  states  examples  of  foreign 
pension  systems.] 

15  Federation  of  teachers'  associations,  city  of  New  York. 

The  A.B.C.  of  teachers'  pensions.  [Memorandum 
submitted  to  the  Senate  committee  of  cities  in  favor 
of  the  Lockwood  Ellenbogen  bill.]  1916.  20  p. 
[Contains  a  discussion  of  the  compulsory  feature; 
contributions ;  objections  to  flat  pensions ;  contributions 
of  younger  teachers  not  to  be  used  for  pensions  of 
older  teachers.] 

1 6  Gray,   Ernest.     Teachers'  pensions.     Contemporary  re- 

view, March,  1894.     v.  65;  453-6. 

[Defends  the  new  pension  system  in  England;  state 

system  better  than  local;   reply  to   W.   A.   Hunter's 

article.] 

17  "Great  Britain.     Departmental  committee  on  the  super- 

annuation of  teachers.  Report  of  the  Committee  on 
the  2nd  reference.  London,  1914.  42  p.  Parlia- 
mentary Doc.  1914,  v.  25.  Cd.  7365. 
Contents:  Conditions  to  which  a  system  ought  to  con- 
form, p.  16;  main  recommendations,  p.  19-22;  notes  of 
dissent  by  Lord  Farrer  favoring  a  minimum  subsist- 
ence pension  and  by  Mr.  H.  Fitzherbert  Wright,  M.  P. 
favoring  the  Scottish  teachers'  pension  fund  plan, 
p.  39-42. 

1 8  * Parliament.     House  of  commons.     Select  com- 

mittee on  school  board  for  London  (superannuation) 
bill.  Report,  together  with  proceedings  of  the  Com- 
mittee, minutes  of  evidence  and  appendices.  London, 
1891.  167  p.  (Parliamentary  doc.  1890-91,  v.  17.) 
[P.  VII-XI  contain  criticism  of  various  pension  pro- 
visions; p.  77-102,  testimony  of  actuary  Sutton  re 
financial  soundness  of  pension  system.] 

19  * Select  committee  on  the  elementary 

education  (teachers'  superannuation)  bill.  Report, 
proceedings  of  the  Committee,  minutes  of  evidence 
and  appendices.  London,  1892.  142  p.  (Parli- 
mentary  doc.  1892,  v.  12). 

[Of  marked  importance  in  considering  pension  princi- 
ples are  pages  I  to  XXVII  which  contain  the  con- 

444 


APPENDICES 

elusions  of  the  commission  and  a  summary  of  testi- 
mony.] 

20  Grote,    Koll.     Ein    Soziales    Pensionssystem.     Padago- 

gische  Zeitung,  May  29,  1913,  v.  42:  415-17. 
[Discussion  of  the  question  of  married  teachers  receiv- 
ing pensions  different  in  amount  from  the  unmarried.] 

21  Gunther,  A.     Staatshilfe  and  Selbsthilfe  in  der  hinter- 

bliebenenversorgun,g  der  deutschen  Idhret.  In 
Padagogische  Zeitung,  Nov.  24  and  Dec.  I,  1910,  v. 
39:  1109-13;  1133-37. 

[Discusses,  from  a  social  point  of  view,  the  basic  prin- 
ciples of  widows'  pensions.] 

22  Harris,  W.  T.     Shall  teachers  be  pensioned?    A  sympo- 

sium. Journal  of  education,  April  2,  1891,  v.  33: 
211-14. 

23  Hendrick,  Burton  J.    "The  superannuated  man."    Labor 

pensions  and  the  Carnegie  Foundation.  McClure's 
magazine,  December,  1908,  v.  32:  115-27. 

24  Hunter,  W.  A.     Superannuation  of  elementary  teachers. 

Contemporary  review,  Jan.  1894,  v.  65 :  84-95. 
the  arguments  in  favor  of  teachers  pensions;  annuities 
should  be  smaller;  local  authorities,  not  state,  should 
pay  pensions.] 

25  *Hutcheson,  Wm.  A.     Report  by  actuary  upon  the  con- 

dition of  the  New  York  public  school  teachers'  retire- 
ment fund.  (In  New  York  (City)  Board  of  Educa- 
tion. Sixth  annual  report  of  the  secretary  of  the 
Board  of  retirement.  1913). 

Reprinted  by  the  Globe  in  a  separate  pamphlet  entitled 
"The  Teachers'  pension  law."  Oct.  i,  1913.  40  p. 
[Describes    principles    underlying    actuarial    scheme, 
actuarial  methods  of  calculating  contribution  and  con- 
structing mortality  tables.] 

26  Jastrow,    Joseph.      Advancement    of    teaching.      North 

American  review,  October,   1907,  v.   186:  213-24. 
[Exclusion  of  state  universities  from  the  benefits  of 
the  Carnegie  foundation.] 

27     Carnegie    foundation    and    its    service    pensions. 

Science,  March  n,  1910,  n.s.  v.  31:  370-6. 

28  Keyes,  Charles  H.     Teachers'  pensions.      (In  National 

445 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

educational  association  of  the  United  States.    Journal 
of  proceedings  and  addresses,  1907,  p.  103-8.) 
[Discusses  five  reasons  why  pensions  should  be  pro- 
vided for  teachers.] 

29  Krueger,  H.    Pensioning  of  teachers.    Journal  of  educa- 

tion (Boston)  March  2,  1905,  v.  61  :  230. 

[A  brief  address   reviewing  pension   systems  in  the 

United  States.] 

30  Love  joy,  Arthur  O.    The  metamorphosis  of  the  Carnegie 

foundation.     Science,    April    n,    1913,    n.s.    v.    37: 

546752. 

[Criticizes  the  Carnegie  foundation's  pension  policy.] 

31  Macnamara,  T.  J.     The  superannuation  of  state  school 

teachers.     Westminster  review,  June,    1893,  v-    J39: 


[Contains  a  history  of  teachers'  pensions  in  England; 
criticizes  the  new  system  because  of  absence  of  bene- 
fits for  those  who  die.] 

32  Manley,   Edward.     Compulsory  insurance  for  teachers. 

Educational  review,  Feb.,  1902,  v.  23:  152-7. 
[Writer  objects  to  compulsory  insurance  and  deduc- 
tions from  salary;  condemns  annuities  on  the  ground 
that  they  are  secured  at  the  expense  of  those  who  re- 
sign or  die.] 

33  Massachusetts.     Board  of  education.     Special  report  on 

teachers'  retirement  allowances  [Boston]  1913.  48  p. 
[House  Doc.  1913,  no.  1926.] 

[Discussion  in  first  eleven  pages  of  the  essential  prin- 
ciples of  a  sound  pension  system.] 

34  *  -    Commission  on  old  age  pensions,  annuities  and 

insurance.  Report.  Boston,  1910.  409  p.  (House 
Doc.  no.  1400.) 

[Pages  77-79  and  Chapters  V,  VIII  and  IX  contain  a 
discussion  of  old-age  pension  principles;  origin  of  the 
problem;  contributory  vs.  non-contributory  pensions; 
voluntary  vs.  compulsory  insurance;  universal  vs.  par- 
tial schemes;  relation  to  wages  and  poor  relief.] 

35  *  -  Commission  on  pensions.    Report.    Boston,  1914. 

345  p.     (House  Doc.  no.  2450.) 
[Chapters  II  and  V  contain  a  discussion  of  the  pension 
problem;  the  merits  of  assisted  insurance  and  com- 
pulsory savings  vs.  gratuities  and  free  pensions.] 
446 


APPENDICES 

36  *Meriam,   Lewis.     Principles  governing  the  retirement 

of  public  employees.  New  York,  D.  Appleton  and 
company,  1918.  476  p.  (Institute  for  government 
research.  Principles  of  administration.) 
["In  this  book  the  author  deals  with  the  whole  sub- 
ject of  public  policy  governing  the  establishment  of 
pension  systems.  The  social,  economic,  administrative 
and  financial  problems  involved  are  considered  and 
much  attention  is  given  to  the  specific  objections  that 
have  been  urged  against  retirement  legislation.] 
36a  *New  Jersey  Bureau  of  state  research  of  the  state 
chamber  of  commerce.  Teachers'  retirement  systems 
in  New  Jersey,  their  fallacies  and  evolution.  Re- 
port prepared  by  Paul  Studensky,  Supervisor  of  the 
pension  staff.  December,  1918.  88  p. 
Contents:  Evolution  of  the  systems.  Present  condi- 
tion and  practical  remedies  [Contains  aslo  chapters  on 
the  fundamental  fallacies  common  to  most  of  the  retire- 
ment systems  in  this  country  and  on  the  fundamental 
principles  of  a  sound  retirement  system] . 

36b  New  Jersey  pension  and  retirement  fund  commission. 
Preliminary  report.  State  research,  Consecutive  no. 
9,  1918.  20  p.  [A  brief  analysis  of  the  unsound  fea- 
tures of  the  teachers'  and  other  retirement  systems  in 
New  Jersey.  A  discussion  of  the  principles  of  sound 
pension  financing.] 

36c  *  Reorganization  of  the  New  Jersey  Teachers'  Re- 
tirement Systems.  State  Research,  Consecutive  no.  13. 
1919.  28  p. 

Contents :  Present  systems  and  their  reorganization — 
A  critical  and  constructive  study.  Contents  of  pro- 
posed legislation — An  act  providing  for  the  establish- 
ment of  a  new  fund  on  an  actuarial  basis.  Actuarial 
estimates — Cost  of  existing  systems  and  of  proposed 
plan. 

37  *New  York  (City)  Commission  on  pensions.     Report  on 

the  teachers'  retirement  fund,  city  of  New  York. 
1915.  [New  York,  The  Trow  press,  1916.]  177  p. 
[Letter  of  submittal  and  chapters  II  and  VI  contain 
critical  and  constructive  discussions  of  the  principles 
of  various  pension  provisions  and  questions  of  cost.] 

447 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

38  * Report  on  the  pension  funds  of  the  city  of  New 

York.  Part  I.  Operation  of  the  nine  existing  pension 
funds.  [New  York,  J.  J.  Little  and  Ives  co.]  1916. 
171  p. 

[Chapters  II  and  IV  contain  criticism  of  benefits,  prin- 
ciples to  be  considered  in  reorganization  plan,  and 
summary  of  conclusions.] 

38a  *  Report  on  the  pension  funds  of  the  city  of  New 

York,  Part  III,  1918.  151  p.  [Contains  the  pro- 
posed retirement  plan  covering  all  branches  of  munici- 
pal service,  and  a  discussion  of  its  underlying  princi- 
pals.] 

39  Patten,  S.  N.    Are  pensions  for  college  teachers  a  form 

of  socialism?  Science,  May  22,  1908,  n.s.  v.  27; 
822-4. 

40  Pensions  and  the  learned  professions.     Science,  Nov.  24, 

1911,  v.  34;  715-17. 

[Criticizes  the  pension  policy  of  the  Carnegie  founda- 
tion.] 

41  Peters,  Michael.    The  mischief  of  pensions.    Gentlemen's 

magazine  (London)  Aug.,  1907,  v.  303:  113-19. 
[Writer  attacks  pensions  on  the  ground  that  they  "in- 
flict certain  moral  injury  on  the  character  of  the  indi- 
vidual   as   well    as    a   very   practical    injury   on   the 
business."] 

42  Pritchett,   Henry   S.      Moral   influence  of  a  university 

pension  system.  Popular  science  monthly,  Nov.,  1911, 
v.  79:  502-13. 

42a     The  pension  problem  and  its  solution.     Atlantic 

monthly.  December,  1918.  p.  737-43.  (A  brief  dis- 
cussion of  the  principles  underlying  the  new  Carnegie 
pension  plan. ) 

43     A  pension  system  for  public  schools.    Independent, 

March  20,  1913,  v.  74:  617-21. 

[The  director  of  the  Carnegie  foundation  discusses  the 
justification  of  teachers'  pensions.  Who  ought  to  pay 
them?  What  form  of  pension  system  would  it  be  fair 
to  adopt?  What  will  a  feasible  pension  system  cost?] 

44    Ten  years  of  college  pensions.    Independent,  Sept. 

13,  1915,  v.  83:361-3. 

45  Prosser,  C.  A.    Teachers'  annuities  and  retirement  allow- 

448 


APPENDICES 

ances.  Journal  of  education  (Boston)  Dec.  28,  1911, 
v.  74;  683-84;  Jan.  4,  1912,  v.  75 :  6-8. 
[Writer  discusses  the  justification  of  teachers'  annui- 
ties on  the  ground  of  health  risk,  financial  risk  and 
inadequacy  of  wages;  should  the  teachers  contribute? 
How  will  they  benefit  ?  Will  their  wages  be  depressed  ? 
Should  the  public  contribute?  Should  refunds  be  pro- 
vided? Against  what  risks  of  life  should  compulsory 
insurance  be  provided?] 

46    The  teacher  and  old  age.    Boston,  Houghton  Mif- 

flin  company,   1913.     139  p.     (Riverside  educational 
monographs. ) 

[Chapters  II,  III  and  IV  contain  a  discussion  of  teach- 
ers' pensions  in  the  light  of  social  insurance  principles ; 
a  part  of  the  expense  of  the  retirement  allowance 
should  be  borne  by  the  beneficiary;  withdrawal  equity; 
questions  of  cost ;  characteristics  of  a  model  retirement 
law] 

47  Reichenbach.     The  superannuation  of  teachers.     Educa- 

tion, March,  1896,  v.  16:  385-95. 

48  Shall  teachers  be  pensioned?     A  symposium.     Journal  of 

education  (Boston)  April  2,  1891,  v.  33:  211-14. 

49  *Sies,  R.  W.    Teachers'  pension  systems  in  Great  Britain. 

Washington,  Govt.  print,  off.,  1913.  88p.  (U.  S. 
Buieau  of  education.  Bulletin  1913,  no.  34) 
[Writer  regards  pensions  as  deferred  pay,  favors  non- 
contributory  pension  systems,  and  direct  relation  of 
pension  to  salary,  and  considers  accumulation  of  re- 
serve fund  unnecessary.  See  p.  70-84] 

50  Smith,  Anna  Tolman.     Teachers'  salaries  and  pensions. 

Educational  review,  Nov.,  1891,  v.  2  :  335-46. 
[Urges  the  establishment  of  teachers'  pension  systems 
in  the  United  States*.;  describes  pension  systems  in  va- 
rious countries] 

51  *Studensky,  Paul.     The  pension  problem  and  the  philoso- 

phy of  contributions.  New  York,  1917.  16  p.  May 
be  obtained  from  the  Bureau  of  Municipal  Research, 
261  Broadway,  New  York  City. 

[Shall  the  employer,  the  employee,  or  both,  bear  the 
cost  of  the  system?] 

449 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

5ia  A  sound  municipal  pension  act  and  central 

supervision  of  all  pension  funds  in  New  Jersey. 
'New  Jersey'  Vol.  VI,  no.  i,  October,  1918.  8  p. 
[An  outline  and  discussion  of  the  features  of  the  bill 
proposed  by  the  New  Jersey  pension  and  retirement 
fund  commission.]  ;  also  Legisl.  Index  1919  nos.  8  and 
10. 

5ib  *Teachers'  retirement  systems  in  New  Jersey, 

their  fallacies  and  evolution  (see  under  item  36a). 

5 ic  Scientific  reorganization  of  the  New  Jersey 

teachers'  pension  systems.  Legislative  index,  1919, 
nos.  2,  6  and  9. 

5 id  New  York  City  teachers'  retirement  fund.  Na- 
tional municipal  review,  July,  1916,  p.  520-22. 

52  Teachers'  pensions.     Gunton's  magazine,  June,  1898,  v. 

14:  393-6. 

[Discusses  purposes  of  pensions  and  argues  against  sal- 
ary deductions] 

53  Temple,  Richard.     Superannuation  of  elementary  teach- 

ers. Fortnightly  review,  April,  1893,  n-s-  v-  53  :  477" 
89. 

[Describes  history  of  the  English  system;  two-fold 
purposes  of  pensions;  joint  contributions;  age  and  dis- 
ability ;  future  charges] 

54  Tews,   J.      Ein   soziales   pensionssystem.      Padagogische 

zeitung,  June  12,  1913,  v.  42:  455-6- 

[Writer  argues  that  married  teachers  should  receive 

pensions  different  in  amount  from  the  unmarried] 

55  Tupper,  Frederick  A.     A  retirement  fund  for  teachers. 

Boston,   New   England  publishing  co.,    1906.     54   p. 

56  Winship,  A.  E.    Teachers'  pensions  and  annuities.    Jour- 

nal of  education,  Sept.  23,  1909,  v.  70:  283-4. 
[Urges  the  establishment  of  pension  systems ;  discusses 
the  thrift  argument  and  the  inadequacy  of  teachers' 
salary ;  public  must  help] 

GENERAL    DESCRIPTIONS    OF    PENSION    SYSTEMS    IN    THE 
UNITED  STATES 

Note :  for  material  on  individual  pension  systems,  see 
Appendix  I. 

450 


APPENDICES 

57  Carnegie  foundation  for  the  advancement  of  teaching. 

Annual  reports. 

[Articles  on  pensions] 

I,  1906.  History  of  teachers'  pensions,  p.  31-38;  Pen- 
sions for  widows  of  professors,  p.  50-51. 

Ill,  1908.  Cost  of  maintaining  a  retirement  allow- 
ance system  in  a  college,  p.  50-53.  Administra- 
tion of  the  retiring  allowance  system  in  tax-sup- 
ported institutions,  p.  64-73. 

V,  1910.  The  establishment  of  retiring  allowance 
systems  by  Haverford  College  and  Brown  Uni- 
versity, p.  32-34. 

VII,  1912.     Pension  systems,  p.  23-44. 

VIII,  1913.     Supplementary   pension   systems   main- 
tained by  associated  colleges;  new  pension  sys- 
tems, p.  33-47- 

IX,  1914.     Pensions  for  public  school  teachers;  state 
and  local  systems,  p.  21-44. 

X,  1915.     Pensions  for  public  school  teachers;  state 

systems,  p.  49-63 ;  pensions  for  university  profes- 
sors, p.  63-65 ;  tabular  statement  of  teachers'  pen- 
sion systems,  p.  86-99  J  summary  of  teachers'  pen- 
sion funds,  p.  100-102. 

XI,  1916.     Pensions   for   public   school   teachers,   p. 
109-17. 

XII,  1917.     Pension  systems,  p.  87-100. 

58  Chicago.   Board  of  trustees  of  the  public  school  teachers' 

retirement  fund.  A  synopsis  of  the  pension  laws  of 
states  and  cities  of  the  United  States.  Dec.  26,  1910. 
I5  P-  [Contains  brief  descriptions  of  pension  sys- 
tems of  three  states  and  twenty  cities;  data  now  ob- 
solete.] 

59  Eliot,  C.  W.  and  others.     The  best  means  of  introduc- 

ing the  pension  system  into  American  universities.  (In 
Association  of  American  universities.  Journal  of  pro- 
ceedings and  addresses,  1906.  p.  64-71.) 

60  Hamilton,  W.  I.     Comparative  table  of  state  insurance 

systems  for  teachers  in  the  United  States.  Journal 
of  education,  June  19,  1913,  v.  77;  705;  July  3,  1913, 
v.  78 :  20. 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

6 1  Henderson,  C.  R.     Pensions  for  public  school  teachers. 

American   journal   of   sociology,    May    1908,   v.    13: 

846-54. 

[Brief  description  of  several  systems  existing  in  United 

States  in  1908.] 

62  Hood,  William  R.    Teachers'  pension  laws  in  the  United 

States.  (In  National  education  association  of  the 
United  States.  Committee  on  teachers'  salaries  and 
cost  of  living,  1913.  Report.  Ann.  Arbor,  1913. 
p.  266-328.) 

63  Keyes,  C.  H.     "Teachers'  pensions."     (In  National  edu- 

cation association  of  the  United  States.  Journal  of  pro- 
ceedings and  addresses,  July,  1907.  p.  103-108.) 

64  Massachusetts.      Board    of    education.      Pensions    for 

teachers.      (In  its  7oth  annual  report,  1905-1906.   Bos- 
ton, 1907.    p.  13-14  and  325-26.) 
[A  description  of  pensions  in  Harvard  university,  Bos- 
ton, and  Massachusetts;  arguments  in  favor  of  pen- 
sions.] 

65     Special  report  on  teachers'  retirement  allow- 
ances.    [Boston]   1913.     48  p.     (House.  Doc.  1913, 
no.  1926.) 

[Comparative  table  of  teachers'  pension  systems  in  the 
United  States,  p.  33-41.] 

66     Commission  on  pensions.     Report,  March  16,  1914. 

Boston,  1914.    345  p.     (House  Doc.  1914,  no.  2450.) 
[An  investigation  of  all  pension  systems  existing  in 
Massachusetts     and     constructive     recommendations; 
comparative    tables    describing    pension    systems    for 
policemen,  firemen,  teachers  and  judges  in  the  states 
and  cities  of  the  United  States.] 

67  National  education  association  of  the  United  States.    Re- 

port of  Committee  on  salaries,  tenure  and  pensions  of 
public  school  teachers  in  the  United  States.     (In  its 
Report,  July,  1905.    p.  177-84-) 
[Brief  description  of  pension  laws  in  force  in  1905.] 

68  New    Jersey.     Alliance    of    women     teachers.     Public 

school  teachers'  retirement  systems  in  the  United 
States.  September,  1918.  no  p.  [A  synopsis  of  re- 
tirement laws.] 

452 


APPENDICES 

69  Prosser,    C.   A.      The   teacher   and   old   age.      Boston, 

Houghton  Mifflin  company,  1913.  139  p.  (Riverside 
educational  monographs. ) 

[Chapter  II  and  appendices  contain  a  statement  of  the 
present  extent  of  teachers'  pensions  and  annuities  in 
the  United  States;  comparative  table  of  state  com- 
pulsory insurance  systems  for  teachers  in  the  United 
States.] 

70  Sies,  R.  W.  and  Elliott,  E.  C.    Teachers'  pensions.     (In 

Cyclopedia  of  education,  ed.  by  Paul  Monroe.  New 
York,  1913.  p.  635-40.) 

[Classification  of  the  systems  in  the  United  States  into 
private  voluntary,  quasi  public,  semi-public,  public.] 

71  Smith,   A.    Tolman.      Teachers'    salaries   and   pensions. 

Educational  review,  Nov.,  1891,  v.  2:  335-46. 
[Urges  the  establishment  of  teachers'  pension  systems 
in  the  United  Stated;  describes  the  pension  systems  of 
several  countries.] 

72  The  teachers'   retirement  fund.     Journal  of  education, 

Feb.  21,  1907,  v.  65:  202-3. 

[A  brief  description  of  pension  funds  in  Philadelphia 

and  other  cities.] 

73  U.  S.     Bureau  of  education.     Annual  reports. 

[Articles  on  pensions.] 

1895,  v.  i,  p.  1079-1102.  (Description  of  early 
mutual  benefit  associations  in  Boston  and  other 
places.  Full  text  of  laws  and  constitutions  govern- 
ing pension  funds  of  California,  Chicago,  Detroit, 
Philadelphia,  New  York.) 

1899,  v.  2,  p.  1478-81.  (Extracts  from  Chicago  and 
Cincinnati  reports.) 

1902,  v.  2,  p.  2369-74. 

1903,  v.  2,  p.  2449-52. 

1904,  V.  2,  p.  2281-85. 

1906,  v.  I,  p.  215-20. 

1907,  v.  i,  p.  448-56.    (Reports  of  Boston,  New  Jersey 
and  Cincinnati  funds.) 

1908,  v.   i,  p.   104-105.      (Brief  description  of   1908 
laws  of  Massachusetts  and  Virginia.) 

1909,  v.  i,  p.  117-121.     (Brief  description  of  the  1909 
laws  of  Minnesota  and  Nebraska,  the  pension  sys- 

453 


TEACHERS'    PENSION    SYSTEMS    IN    THE    UNITED    STATES 

terns  of  Harrisburg  and  Virginia,  and  the  pension 
bill  for  the  District  of  Columbia.) 

1911,  v.  i,  p.  96-100.     (Brief  description  of  pension 
laws  of   1911,  of  New  York,  Ohio,  Pennsylvania, 
Illinois  and  Kansas.) 

1912,  v.   i,  p.  65-68,   151-52.      (Brief  description  of 
pension   systems   of   Arizona,   Virginia,   Maryland, 
New  Jersey,  New  York;  list  of  states  having  pension 
systems  in  1912.) 

1913,  v.    i,  p.  913-916.      (Brief  description  of  new 
pension   laws    of    Massachusetts,    California,    New 
Jersey  and  Maine.) 

74     Bulletins  of  the  Bureau  of  education. 

[Articles  on  teachers'  pensions.] 

1913,  no.  55.     Teachers'  pensions,  p.  137-54.     (Con- 
tains a  digest  of  pension  laws  in  force  in  1913.) 

1915,  no.  47.     Teachers'  pensions,  p.  447-65.     (Con- 
tains a  digest  of  pension  laws  in  force  Jan.  i,  1915; 
dates  of  laws  not  given.) 

1916,  no.  14.     State  pension  systems  for  public  school 
teachers,  prepared  for  the  Committee  on  teachers' 
salaries,  pensions  and  tenure  of  the  National  educa- 
tion association,  by  W.  Carson  Ryan,  Jr.  and  Roberta 
King.     46  p.     (Contains  a  comparative  chart,  ex- 
tracts from  letters  of  secretaries  of  retirement  funds, 
and  texts  of  laws.) 

75     Teachers'  pensions.     (From  Current  Topics,  Com- 
missioner  of    Education's    report,    1905    and    1906.) 
Washington,   Govt.   print,   off.,    1910.     21   p.      (6oth 
Cong.,  2d  sess.     Senate.     Doc.  no.  585.     Serial  no. 

54070 

76     Bureau  of  labor.     Pension  funds   for  municipal 

employees  and  railroad  pension  systems  in  the  United 
States.     Washington,  Govt.  print,  off.,   1910.     89  p. 
(6ist  Cong.,  2d  sess.    Senate  Doc.  427.    Serial  5658.) 
[Contains  a  comparative  chart  of  teachers'  pensions 
in  the  United  States.] 


454 


INDEX 


Accrued  liabilities,  104-106,  127. 

Actuarial  tables,  431-440. 

Actuary,  determination  of  cost  of 
benefits  by,  101-104. 

Administrative  expense,  contribution 
towards,  133. 

Age  and  salary,  contributions  gradu- 
ated according  to,  150. 

Albany  Teachers'  Retirement  Fund, 
laws,  etc.,  329. 

Allegheny  County  (Md.)  Teachers' 
Retirement  Fund,  laws,  etc.,  319. 

Altoona  (Pa.)  Teachers'  Retirement 
Fund,  laws,  etc.,  338. 

Annuity  associations,  6-12;  failure  of, 

13-15. 

Annuity  benefits,  requirements  for, 
18. 

Arizona,  State  and  local  funds,  30. 

Arizona  Teachers'  Retirement  Sys- 
tem, laws,  etc.,  309. 

Army  and  Navy,  pensions  in  United 
States,  15. 

Atlanta  Teachers'  Retirement  System, 
laws,  etc.,  312. 

Baltimore,  sick  benefit  association, 
6;  annuity  association,  8,  13. 

Baltimore  County  Teachers'  Retire- 
ment Fund,  laws,  etc.,  320. 

Baltimore  Teachers'  Retirement 
Fund,  eligibility  to  retirement,  60; 
pension  determined  by  salary,  68; 
death  benefit,  87 ;  growth  of  pen- 
sion payments,  97;  financing  gov- 
ernment's contribution,  142;  con- 
tributions graduated,  149;  history 
of,  214-216;  analyzed,  302;  laws, 
etc.1,  319. 

Benefits,  conditions  under  which 
granted,  41-47 ;  amount  of,  47 ;  di- 
vision of  cost  of,  48-53 ;  determin- 
ing cost  of,  95-115;  differences  in 
cost  of,  115-116. 

Boston,  annuity  association,  8,  13. 

Boston  Mutual  Benefit  Association, 
effects  of  operation,  13. 

Boston  Teachers'  Permanent  Fund, 
graduated  pensions,  69;  inadequacy 
of  contributions,  113;  division  of 
cost  of  benefits,  123 ;  financing 
government's  contribution,  140 ;  con- 
tribution uniform  throughout,  145; 


history  of,  212-214;  analyzed,  302; 
laws,  etc.,  322. 

Boston  Teachers'  Retirement  Fund, 
eligibility  to  retirement,  60;  inade- 
quacy of  contributions,  113;  divi- 
sion of  cost  of  benefits,  123 ;  history 
of,  209-212;  analyzed,  302;  laws, 
etc.,  321. 

Bristol  (R.  I.)  Teachers'  Retirement 
Fund,  laws,  etc.,  341. 

British  Civil  Service,  growth  of  pen- 
sion payments,  99;  non-contribu- 
tory system,  120. 

Brooklyn,  mutual  aid  association,  4; 
annuity  association,  6,  8,  n,  13,  14; 
pension  legislation,  15 ;  retirement 
fund,  17 ;  compulsory  fund,  21 ;  re- 
tirement fund  contributions,  25. 

Bruere,  Henry,  comment  on  joint 
contributory  system,  121. 

Buffalo,  sick  benefit  association,  6. 

Buffalo  Teachers'  Retirement  Fund, 
17;  compulsory  fund,  20;  eligibil- 
ity to  retirement,  60 ;  pension  deter- 
mined by  salary,  68 ;  amount  of  dis- 
ability benefit,  81 ;  financing  govern- 
ment's contribution,  142 ;  history  of, 
216-218 ;  analyzed,  303 ;  laws,  etc., 
330. 

California  Teachers'  Retirement  Sal- 
ary Fund,  eligibility  to  retirement, 
60 ;  flat  pension  system,  66 ;  disa- 
bility examinations,  85;  inadequacy 
of  contributions,  107;  financing 
government's  contribution,  138 ; 
contribution  uniform  throughout, 
145;  management  of  system,  157; 
history  of,  195-198;  analyzed,  296; 
laws,  etc.,  309. 

Camden,  mutual  aid  association,  4. 

Canton,  fund  under  uniform  Ohio 
law,  336. 

Cash  disbursement  fund,  operation  of 
system  on,  100,  103. 

Cash  disbursement  method,  135. 

Charleston  Teachers'  Retirement 
Fund,  established,  29;  laws,  etc., 
342. 

Chester  (Pa.)  Teachers'  Retirement 
Fund,  laws,  etc.,  338. 

Chicago,  sick  benefit  association,  6. 

Chicago  Teachers'  Pension  and  Re- 


455 


INDEX 


tirement  Fund,  established,  17 ; 
compulsory  fund,  20;  retirement 
fund  contributions,  24-25;  retire- 
ment fund  insolvency,  26;  eligibil- 
ity to  retirement,  60;  flat  pension 
system,  66;  disability  examinations, 
85 ;  inadequacy  of  contributions, 
107 ;  financing  government's  contri- 
bution, 141 ;  contributions  gradu- 
ated, 147;  compulsory  participa- 
tion, 156;  history  of,  220-233;  ana- 
lyzed, 303;  laws,  etc.,  314. 

Cincinnati,  annuity  association,  8; 
retirement  fund,  17;  compulsory 
fund,  20;  retirement  fund  contri- 
butions, 23 ;  fund  under  uniform 
Ohio  law,  336. 

Civil  Service  of  Austria,  growth  of 
pension  payments,  100. 

Cleveland  Teachers'  Pension  Fund, 
eligibility  to  retirement,  60;  length 
of  service  pension,  67;  death  bene- 
fit, 87;  inadequacy  of  contributions, 
107;  financing  government's  contri- 
bution, 138,  140;  contribution  uni- 
form throughout,  145 ;  history  of, 
207-209;  analyzed,  304;  laws,  etc., 
336. 

Cogswell,  E.  S.,  statement  regarding 
financial  condition  of  Minnesota 
fund,  192. 

Cohoes  (N.  Y.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  330. 

Columbus  (Ga.)  Teachers'  Retire- 
ment System,  laws  etc.,  312. 

Combined  benefit,  70-72. 

Compulsory  funds,  20. 

Compulsory  participation,  154-157. 

Compulsory  retirement,  63. 

Connecticut,  annuity  association,  8. 

Connecticut  Teachers'  Retirement 
Fund,  established,  30;  benefits 
granted,  41 ;  eligibility  to  retire- 
ment, 60;  compulsory  retirement, 
63 ;  combined  benefit,  70 ;  death 
benefit,  87;  scientifically  construct- 
ed system,  108-109;  liquidating  ac- 
crued liabilities  in,  128,  131 ;  rate  of 
government  contribution,  130;  new 
entrants'  benefits,  133;  rate  of  in- 
terest guarantee,  134;  contributions 
graduated,  148 ;  history  of,  239-242 ; 
analyzed,  296;  laws,  etc.,  311;  laws 
providing  for  sound  pension  sys- 
tem, 386-392. 

Contributions,  of  members  of  sys- 
tem, 53;  inadequacy  of,  107-113; 


graduated,  145-151 ;  distribution  of, 
over  period  of  service,  151 ;  mini- 
mum, 171. 

Dayton,  fund  under  uniform  Ohio 
law,  336. 

Death  benefits,  early,  4,  41,  44, 
86-90. 

Denver  Teachers'  Retirement  Fund, 
eligibility  to  retirement,  60;  length 
of  service  pension,  67 ;  inadequacy 
of  contributions,  107;  non-contrib- 
utory system,  123-124;  financing 
government's  contribution,  I40n ; 
management  of  system,  157;  history 
of,  219;  analyzed,  304;  laws,  etc., 
310. 

Des  Moines,  sick  benefit  association, 
6. 

Detroit,  sick  benefit  association,  6. 

Detroit  Teachers'  Retirement  Fund, 
established,  17;  compulsory  fund, 
20;  laws,  etc.,  323. 

Disability  benefit,  40,  43,  78-85. 

Dismissal,  benefits  at,  90. 

District  of  Columbia,  laws,  etc.,  312. 

Division  of  cost,  between  government 
and  teachers,  117-124. 

Duluth  Teachers'  Retirement  Fund 
Association,  laws,  etc.,  324. 

Elmira  (N.  Y.)  Teachers'  Pension 
Fund,  laws,  etc.,  330. 

Erie  Teachers'  Retirement  System, 
established,  30;  laws,  etc.,  338. 

Evansville,  sick  benefit  association,  6. 

Federation  of  Teachers'  Associations, 
New  York  City,  views  on  compul- 
sory participation,  155. 

Firemen,  pensions  in  U.  S.,  15. 

"Flat"  pension  systems,  65. 

Governmental  contributions,  23-26. 

Government's  contribution,  125-142. 

Great  Britain,  pension  cost,  59. 

Greene  County  (N.  Y.)  Teachers' Re- 
tirement Fund,  laws,  etc.,  330. 

Harrisburg  (Pa.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  339. 

Hoboken,  sick  benefit  association,  6. 

Illinois  Teachers'  Pension  and  Re- 
tirement Fund,  eligibility  to  retire- 
ment, 60 ;  flat  pension  system,  66 ; 
disability  examinations,  85 ;  inad- 
equacy of  contributions,  107; 
financing  government's  contribu- 
tion, 140  n;  contributions  gradu- 


456 


INDEX 


ated,  147 ;  compulsory  participation, 

156;  history  of,  176-179;  analyzed, 

297;  laws,  etc.,  313. 
Indiana,  State  and  local  funds,  32. 
Indiana    State   Teachers'    Retirement 

Fund,  laws,  etc.,  315. 
Indianapolis  Teachers'  Pension  Fund, 

laws,  etc.,  316. 
Iowa,  proposed  system,  317. 
Jersey  City,  mutual  aid  association,  4. 
Jessup,    W.   A.,    report   on   financial 

condition  of  Cleveland  fund,  208. 
Joint  or.  partly  contributory  system, 

I2O-I22. 

Lancaster  (Pa.)  Teachers'  Retirement 
Fund  Association,  laws,  etc.,  339. 

Laws,  references  to,  307-345;  provid- 
ing for  sound  pension  systems  in 
Massachusetts,  346-354;  in  New 
York  City,  355-373J  in  Pennsyl- 
vania, 374-385;  in  Connecticut, 
386-392;  in  New  Jersey,  393-4°9; 
in  Ohio,  410-424;  in  Vermont,  425- 
430. 

Length  of  service,  pension  deter- 
mined by,  66;  contribution  gradu- 
ated according  to,  165. 

Length  of  service  and  salary,  pension 
determined  by,  69-70. 

Liabilities,  of  a  going  system,  113- 
115;  under  different  benefits,  115- 
116. 

Life  insurance,  in  early  associations, 

5. 

Lincoln,  sick  benefit  association,  6. 

Liverpool,  liquidating  accrued  liabili- 
ties, 129,  131. 

Local  funds,  31. 

London,  liquidating  accrued  liabili- 
ties in,  128. 

London  Metropolitan  Police  Pension 
Fund,  growth  of  pension  payments, 
99. 

Louisville  Teachers'  Insurance  and 
Annuity  Fund,  laws,  etc.,  317. 

Maine  School  Pension  Fund,  super- 
annuation benefit,  40;  eligibility  to 
retirement,  60;  length  of  service 
pension,  67;  disability  benefit  dis- 
regarded, 79;  growth  of  pension 
payments,  97 ;  non-contributory 
system,  123-124;  financing  govern- 
ment's contribution,  142 ;  manage- 
ment of  system,  157;  history  of, 
J73,  174;  analyzed,  297;  laws,  etc., 
318. 


Management  of  systems,  55,  157-161. 

Maryland  Retirement  System,  laws, 
etc.,  319. 

Massachusetts,  annuity  association,  8. 

Massachusetts  Teachers'  Retirement 
System,  State  and  local  funds,  33; 
benefits  granted,  41 ;  eligibility  to 
retirement,  59;  compulsory  retire- 
ment, 63;  combined  benefit,  70;  dis- 
ability examinations,  85 ;  death  ben- 
efit, 87 ;  scientifically  constructed 
system,  108-112;  joint  contributory 
system,  124 ;  liquidating  accrued  lia- 
bilities in,  128,  131 ;  rate  of  govern- 
ment's contribution,  130;  new  en- 
trants' benefits,  133 ;  rate  of  inter- 
est guarantee,  134;  contributions 
graduated,  148;  compulsory  par- 
ticipation, 156;  management  of  sys- 
tem, 158;  actuarial  estimate  of  lia- 
bilities, 165 ;  history  of,  234-239 ; 
analyzed,  297 ;  laws,  etc.,  320 ; 
laws  providing  for  sound  pension 
system,  346-354- 

Maximum  pension,  provisions  for, 
72-76. 

Medical  examinations,  82-85. 

Michigan  Teachers'  Retirement  Fund, 
eligibilty  to  retirement,  60;  gradu- 
ated pensions,  69;  wholly  contribu- 
tory system,  123-124;  contributions 
graduated,  149;  history  of,  200-202; 
analyzed,  298;  laws,  etc.,  323. 

Milwaukee  Teachers'  Retirement 
Fund,  laws,  etc.,  345. 

Minimum  pension,  provisions  for, 
72-74. 

Minneapolis  Teachers'  Retirement 
Fund  Association,  laws,  etc.,  324. 

Minnesota  Teachers'  Insurance  and 
Retirement  Fund,  eligibility  to  re- 
tirement, 60;  length  of  service  pen- 
sion, 66 ;  disability  examinations, 
85;  death  benefit,  87;  growth  of 
pension  payments,  97 ;  inadequacy 
of  contributions,  107;  financing 
government's  contribution,  I4on ; 
contributions  graduated,  147;  his- 
tory of,  190-192;  analyzed,  298; 
laws,  etc.,  323. 

Montana  Public  School  Teachers'  Re- 
tirement Salary  Fund,  laws,  etc., 
325. 

Mt.  Vernon  (N.  Y.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  330. 

Mutual  aid  associations,  early,  4-15. 


457 


INDEX 


Nassau  County  (N.  Y.)  Teachers 
Retirement  Fund,  laws,  etc.,  331. 

National  Civil  Service  of  France, 
growth  of  pension  payments,  99. 

Nevada  Teachers'  Retirement  Salary 
Fund,  laws,  etc.,  326. 

New  Bedford,  sick  benefit  associ- 
ation, 6. 

New  entrants'  benefits,  contribution 
towards,  132. 

New  Hampshire  Teachers'  Retirement 
System,  laws,  etc.,  326. 

New  Haven  Teachers'  Pension  Fund, 
laws,  etc.,  311. 

New  Jersey,  reorganization  of  retire- 
ment systems,  274-281 ;  laws  pro- 
viding for  sound  pension  systems, 
393-409. 

New  Jersey  Teachers'  Retirement 
Fund,  pension  legislation,  15;  es- 
tablishment of  fund,  17;  pension 
extension,  38;  proof  of  incapacity, 
57;  pension  determined  by  salary, 
68 ;  disability  benefit,  81 ;  disability 
examinations,  85 ;  division  of  cost 
of  benefits,  123 ;  contributions  grad- 
uated, 146;  history  of,  183-190; 
analyzed,  299;  laws,  etc.,  319. 

New  Jersey  35-Year  Service  Pension 
System,  superannuation  benefit,  40; 
eligibility  to  retirement,  60;  pen- 
sion determined  by  salary,  68;  divi- 
sion of  cost  of  benefits,  123;  cash 
disbursement  method,  136 ;  manage- 
ment of  system,  157;  history  of, 
169-173;  analyzed,  299;  laws,  etc., 
326. 

New  London  Teachers'  Pension 
Fund,  laws,  etc.,  311. 

New  Orleans  Teachers'  Retirement 
Fund,  eligibility  to  retirement,  60; 
pension  determined  by  salary,  68; 
disability  examinations,  85 ;  death 
benefit,  87;  wholly  contributory 
system,  123-124;  contributions 
graduated,  149;  history  of,  218-219; 
analyzed,  304;  laws,  etc.,  318. 

Newport  (R.  I.)  Teachers'  Retire- 
ment Fund,  established,  29;  laws, 
etc.,  341. 

New  York  City,  annunity  association, 
6,  13,  14- 

New  York  City  Teachers'  Retirement 
Fund,  pension  legislation,  15;  es- 
tablished, 17 ;  compulsory  fund,  21 ; 
retirement  fund  contributions,  24, 
25;  unsoundness  of  fund,  27;  fund 


on  actuarial  basis,  33;  pension  ex- 
tension, 38 ;  benefits  granted,  41 ; 
eligibility  to  retirement,  60;  com- 
pulsory retirement,  63 ;  combined 
benefit,  72;  disability  examinations, 
85;  death  benefit,  87;  growth  of 
pension  payments  in  old  fund,  97; 
scientifically  constructed  system, 
108-109;  inadequacy  of  contribu- 
tions in  old  fund,  113;  liquidating 
accrued  liabilities  in,  128,  131 ;  sub- 
sequent service  pension  liabilities, 
129;  rate  of  government  contribu- 
tion, 130;  new  entrants'  benefits, 
133;  rate  of  interest  guarantee, 
134;  coordinating  elements  of  con- 
tribution, 135 ;  financing  govern- 
ment's contribution,  138;  contribu- 
tions graduated,  150;  compulsory 
participation,  157;  actuarial  esti- 
mate of  liabilities,  165 ;  history  of, 
243-264;  analyzed,  305;  laws,  etc., 
331 ;  laws  providing  for  sound  pen- 
sion system,  355~373- 

New  York  City  Teachers'  Mutual 
Life  Assurance  Association,  estab- 
lishment of,  4. 

New  York  Commission  on  Pensions, 
investigation  of  mortality  among 
teachers,  96. 

New  York  Teachers'  Retirement 
Fund,  established,  30;  eligibility  to 
retirement,  60;  pension  determined 
by  salary,  68;  financing  govern- 
ment's contribution,  138;  contribu- 
tions graduated,  146;  history  of, 
179-182;  analyzed,  299;  laws,  etc., 
329- 

Non-contributory  system,  119. 

North  Dakota  Teachers'  Insurance 
and  Retirement  Fund,  laws,  etc., 

334- 

Norwood,  fund  under  uniform  Ohio 
law,  337. 

Ohio,  establishment  of  retirement 
system,  282-286;  laws  providing  for 
sound  pension  system,  410-424; 
uniform  laws  governing  cities,  335. 

Omaha,  annuity  association,  8. 

Omaha  Teachers'  Retirement  Fund 
Association,  laws,  etc.,  325. 

Outside  service,  credit  for,  58. 

Paris  Police  Pension  Fund,  growth  of 
pension  payments,  99. 

Participation,  compulsory  vs.  volun- 
tary, 54. 


458 


INDEX 


Paterson,  sick  benefit  association,  6. 

Pennsylvania  Public  School  Teach- 
ers' and  Employees'  Retirement 
System,  established,  30;  State  and 
local  funds,  33 ;  pension  extension, 
39 ;  benefits  granted,  41 ;  eligibility 
to  retirement,  59;  compulsory  re- 
tirement, 63 ;  combined  benefit,  72 ; 
disability  examinations,  85 ;  death 
benefit,  87 ;  scientifically  constructed 
system,  108-109;  liquidating  ac- 
crued liabilities,  129,  131 ;  rate  of 
government  contribution,  131;  new 
entrants'  benefits,  133;  coordinating 
elements  of  contribution,  135;  con- 
tributions graduated,  150;  compul- 
sory participation,  157;  actuarial 
estimate  of  liabilities,  165;  history 
of,  265-273;  analyzed,  300;  laws 
etc.,  338;  laws  providing  for  sound 
pension  system,  374-385. 

Pension,  meaning  of  term,  3n. 

Pension  legislation,  unsound,  15-23. 

Pension  payments,  growth  of,  95-100. 

Pension  systems,  pioneer,  17;  actu- 
arial process  in  investigation  of, 
27n ;  present  extent  of,  29 ;  outlined, 
35-56;  credit  for  outside  service 
in,  58. 

Peoria  Teachers'  Pension  and  Retire- 
ment Fund,  laws,  etc.,  315. 

Philadelphia,  annuity  association,  8, 
13. 

Philadelphia  Teachers'  Retirement 
Fund,  reorganization  of,  33 ;  eligi- 
bility to  retirement,  60;  pension  de- 
termined by  salary,  68 ;  disability 
examinations,  85 ;  financing  govern- 
ment's contribution,  142 ;  contribu- 
tions graduated,  149;  history  of, 
203-207 ;  analyzed,  306 ;  laws,  etc., 
339- 

Pittsburgh  Teachers'  Retirement  As- 
sociation, superannuation  benefit, 
40;  eligibility  to  retirement,  60; 
flat  pension  system,  66;  disability 
benefit  disregarded,  79 ;  non-con- 
tributory system,  123-124;  financ- 
ing government's  contribution, 
142;  management  of  system,  157; 
history  of,  166-169;  analyzed,  306; 
laws,  etc.,  340. 

Policemen,  pensions  in  U.  S.,  15. 

Portland  (Ore.)  Teachers' Retirement 
Fund  Association,  laws,  etc.,  337. 

Premature  retirement,  danger  of,  61. 


Prior  service  pensions,  contributions 
for,  126-129. 

Providence  (R.  I.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  341. 

Rate  of  interest,  contribution  toward 
guarantee  of,  134. 

Reading  (Pa.)  Teachers'  Retirement 
Fund,  laws,  etc.,  340. 

Reserve  fund,  operation  of  system 
on,  100-103. 

Reserves,  systems  without,  165-174; 
inadequate,  in  States,  175-202;  in- 
adequate in  local  systems,  203-219. 

Resignation,  benefits  at,  90. 

Retirement  benefit,  eligibility  to,  in 
State  funds,  60;  eligibility  to,  in 
city  funds,  60. 

Retirement  pensions,  three  periods  in 
movement  for,  3. 

Rhode  Island  Teachers'  Pension  Sys- 
tem, division  of  cost  of  benefits, 
123 ;  laws,  etc.,  340. 

Rochester,  N.  Y.,  sick  benefit  associ- 
ation, 6. 

Rochester  (N.  Y.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  333. 

St.  Louis,  retirement  fund,  17. 

St.  Paul,  sick  benefit  association,  6. 

St.  Paul  Teachers'  Retirement  Fund 
Association,  laws,  etc.,  324. 

Salary,  pension  determined  by,  67; 
contribution  graduated  according  to, 
145. 

Salary  and  length  of  service,  contri- 
bution graduated  according  to,  146. 

Salt  Lake  City  Teachers'  Retirement 
Fund,  laws,  etc.,  343. 

San  Francisco  Retirement  Fund,  es- 
tablished, 17;  laws,  etc.,  310. 

Saratoga  County  (N.  Y.)  Teachers' 
Retirement  Fund,  laws,  etc.,  333. 

Savannah,  sick  benefit  association,  6. 

"Savings  or  thrift"  systems,  65. 

Schenectady  Teachers'  Retirement 
Fund,  laws,  etc.,  333. 

Scotland,  liquidating  accrued  liabili- 
ties in,  128. 

Scranton,  Pa.,  sick  benefit  associ- 
ation, 6. 

Scranton  (Pa.)  Teachers'  Retirement 
Fund,  laws,  etc.,  340. 

Sick  benefit  associations,  5. 

Solvency  of  system,  guarantee  of, 
134- 

South  Bend  (Ind.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  316. 


459 


Springfield,  fund  under  uniform  Ohio 

law,  337- 

State-wide  funds,  growth  of,  30-34. 
Statistical     reports,    preferences     to 

307-345. 

Subsequent  service  pensions,  contri- 
butions for,  129-132. 

Superannuation  benefit,  40,  42 ;  eli- 
gibility for,  57;  conditions  for,  62; 
amount  of,  63-72. 

Swarthmore,  sick  benefit  association, 
6. 

Syracuse  Teachers  Retirement  Fund, 
laws,  etc.,  333. 

Teachers'  contributions,   143-153. 
Teachers'   pensions,   evolution   of,   in 

United  States,  3-34. 
Terre    Haute    Teachers'    Retirement 

Fund,  laws,  etc.,  317. 
Toledo,    fund    under    uniform    Ohio 

law,  337. 
Tontine,   forfeiture  principle  abroad 

known  as,  12,  90,  91. 
Trenton,  sick  benefit  association,  6. 
Troy  Teachers   Pension  Fund,  laws, 

etc.,  334. 

Utah  Teachers'  Retirement  Fund, 
laws,  etc.,  342. 

Vermont,  establishment  of  new  re- 
tirement system,  287-294;  laws  pro- 
viding for  sound  pension  system, 
425-430. 

Vermont  Teachers  Retirement  Fund 
Association,  laws,  etc.,  343. 


Virginia  Retired  Teachers'  Fund,  eli- 
gibility to  retirement,  60;  pension 
determined  by  salary,  68;  disability 
benefit,  81 ;  inadequacy  of  contri- 
butions in,  113;  financing  govern- 
ment's contribution,  142;  contribu- 
tions graduated,  146;  management 
of  system,  157;  history  of,  198-200; 
analyzed,  301 ;  laws,  etc.,  343. 

Voluntary  funds,  19. 

Washington,  proposed  system,  344. 

Washington,  D.  C,  annuity  associ- 
ation, 8,  13. 

Watervliet  (N.  Y.)  Teachers'  Retire- 
ment Fund,  laws,  etc.,  334. 

Westchester  County  (N.  Y.)  Teach- 
ers' Retirement  Fund,  laws,  etc., 

334- 

Wholly  contributory  system,  118. 

Wilkes-Barre  Teachers'  Retirement 
Fund,  laws,  etc.,  340. 

Wilmington  Teachers'  Retirement 
Fund,  laws,  etc.,  311. 

Wisconsin  Teachers'  Insurance  and 
Retirement  Fund,  established,  30; 
eligibility  to  retirement,  60;  length 
of  service  pension,  66;  inadequacy 
of  contributions,  107;  financing 
government's  contribution,  141 ; 
contributions  graduated,  149;  com- 
pulsory participation,  156 ;  history 
of,  193-195  J  analyzed,  301 ;  laws, 
etc.,  344- 

Withdrawal  benefits,  45,  90-94. 

Yonkers  Teachers'  Retirement  Fund, 
laws,  etc.,  334. 


460 


Universil 


VITA 

Paul  Studensky  was  born  in  Petrograd,  Russia,  on  November 
13,  1887.  He  was  graduated  from  the  Petrograd  Third  Gymnasia 
College  in  1905  and  entered  the  University  of  Petrograd  where 
he  studied  jurisprudence  and  political  economy.  In  1908  he  left 
Russia  for  France  and  entered  the  University  of  Sorbonne  at  Paris 
where  he  studied  chemistry,  physics  and  natural  sciences.  In  1911 
he  came  to  the  United  States,  and  after  studying  for  two  years  at 
the  New  York  University,  taking  up  subjects  in  government, 
economics  and  statistics,  he  entered  Columbia  University  in  1917, 
where  his  major  work  was  in  government  under  Professor  Howard 
Lee  McBain  and  Professor  Edward  M.  Sait.  While  pursuing  his 
university  studies  during  the  years  of  1913-1919,  he  was  engaged 
also  in  research  work  under  the  direction  of  Dr.  Frederick  L. 
Cleveland  and  Dr.  Charles  A.  Beard. 


